USD/CAD Price Analysis: CAD rises on oil supply concerns

• Oil prices rose on Tuesday after Iran fired missiles into Israel.

• Canadian manufacturing activity rose for the first time in seventeen months.

• The US dollar rebounded against most of its peers due to safe haven inflows.

USD/CAD price analysis shows a return to bearish momentum as the Canadian dollar gains on oil due to Middle East tensions. At the same time, the dollar was firm as investors bought safe-haven assets amid geopolitical tensions.

–Interested in learning more about forex brokers in Canada? Check out our detailed guide –

Oil prices rose on Tuesday after Iran fired missiles at Israel, escalating the war in the Middle East. The Israel-Gaza war has slowly expanded to include Iran and Lebanon, threatening to be a larger war that will likely disrupt oil supplies. The supply disruption will tighten the market, driving up prices.

Meanwhile, the Canadian dollar rose because Canada is a net exporter of oil. Consequently, rising oil prices result in more revenue for the country, strengthening its currency. At the same time, upbeat domestic data supported the loonie. In particular, manufacturing activity rose for the first time in seventeen months. Canada’s PMI rose from 49.5 to 50.4 in September, marking an expansion.

Meanwhile, the US dollar rebounded against most of its peers due to safe haven inflows. The conflict between Iran and Israel has dampened risk appetite, leading to a rush to safer assets. However, since the loonie was also rising, USD/CAD fell.

Elsewhere, data from the previous session revealed steady US manufacturing activity. Moreover, job openings have increased, indicating a strong demand for labor. US ISM manufacturing PMI missed forecasts but was steady at 47.2. Meanwhile, there were 8.04 million job vacancies against forecasts of 7.64 million.

Market participants are now awaiting the all-important non-farm payrolls report for more clues on the outlook for Fed interest rate cuts.

Key USD/CAD Events Today

• US ADP Non-Farm Labor Change

USD/CAD Price Technical Analysis: Bears target 1.3425 support

Technically, the USD/CAD price dropped below the 30-SMA after finding resistance at the 0.5 Fib level. Bulls took over but failed to hold the price above the SMA. The price recently broke out of a bullish channel with an impulsive move that stopped at the 1.3425 support level.

–Are you interested in learning more about social trading platforms? Check out our detailed guide –

If the subsequent upward move was corrective, the bears could make another impulsive leg lower. Therefore, the price could drop below the 1.3425 level to make lower lows.

Want to trade forex now? Invest at eToro!

68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.