USD/CAD Price Prediction – Canadian Dollar Moves Higher As Oil Rallies

Key Insights

• WTI oil rallied towards the $108 level, providing support to the Canadian dollar. 

• U.S. Consumer Sentiment declined to multi-decade lows. 

• A move below 1.2900 will push USD/CAD towards the support level at 1.2870.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD faced strong resistance near 1.3000 and pulled back towards 1.2900 as WTI oil rallied from $104 to $108, providing support to commodity-related currencies.

Today, the U.S. released New Home Sales report for May, which indicated that New Home Sales increased by 10.7% month-over-month after declining by 12% in April.

While New Home Sales rebounded from April lows, they remain well below levels that were seen back at the start of the year, which is not surprising given the strong increase in mortgage rates.

Traders also had a chance to take a look at the final reading of the Michigan Consumer Sentiment report for June. The report showed that Consumer Sentiment declined from 58.4 in May to 50 in June, compared to analyst consensus of 50.2. Consumer Sentiment is at multi-decade lows, which indicates that consumers are extremely worried about the state of the economy.

In the near term, traders will likely remain focused on oil price dynamics, which will have a major impact on commodity-related currencies, including Canadian dollar.

USD/CAD Tests Support At 1.2900

USD/CAD has recently managed to settle below the support at 1.2940 and made an attempt to get below the next support level at 1.2900.

In case USD/CAD settles below 1.2900, it will head towards the support at the 20 EMA at 1.2870. A successful test of the support at 1.2870 will open the way to the test of the next support level at 1.2830. In case USD/CAD declines below this level, it will head towards the support level at the 50 EMA at 1.2810.

On the upside, the previous support at 1.2940 will serve as the first resistance level for USD/CAD. In case USD/CAD climbs back above this level, it will move towards the next resistance at 1.2970. A move above this level will push USD/CAD towards the resistance at 1.3000.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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