USD/CAD sits below 1.3600 due to rising oil prices

• USD/CAD steady despite strong US dollar supported by rising WTI oil price supporting the Canadian dollar.
• Hurricane Francine Raises Oil Prices; American manufacturers are evacuating staff from the Gulf Coast, reducing production.
• Speculation growing on a BoC rate cut due to rising unemployment in Canada; upcoming US CPI data to influence Fed decisions.

USD/CAD was largely unchanged during the North American session and traded around 1.3560 as buyers failed to overcome strong resistance seen at the 200-day moving average (DMA) at 1.3588.

USD/CAD trades near 1.3560 as higher oil prices cap pair’s gains

Market sentiment remains bullish as Wall Street posts gains, while a strong US dollar failed to push USD/CAD towards the 1.3600 mark, mainly due to higher oil prices.

West Texas Intermediate (WTI), the US crude oil benchmark, rose on fears that Hurricane Francine was on track to hit the Louisiana coast. According to Reuters, “Gulf Coast oil and gas producers have begun evacuating staff and limiting drilling to prepare for Tropical Storm Francine.”

The Canadian dollar has weakened since the Bank of Canada (BoC) was the first major central bank to cut interest rates amid fears of an economic slowdown. Last week, Canada’s unemployment rate rose to 6.6%, the highest in seven years, excluding the two years of the COVID-19 pandemic.

BoC Governor Tiff Macklem will cross the wires on Tuesday. Last week, he said a more significant rate cut was possible if the economy needed a boost.

As for the US, investors are watching the consumer price index (CPI) release in August, which is expected to confirm that the Federal Reserve may start cutting rates at its next monetary policy meeting on September 17-18.

USD/CAD Price Forecast: Technical Insights

From a technical perspective, the major is set to continue the ongoing downtrend unless USD/CAD breaks the 200-DMA at 1.3588, which will expose the 1.3600 figure. Once it is removed, another upside will be seen, with the next key resistance area being 1.3618, the August 22nd and 23rd highs and the confluence of the 50 and 100-DMA around 1.3667/75.

Conversely, on the path of least resistance, the first USD/CAD support would be 1.3550. A breach of the latter will expose 1.3500, followed by September 6 to 1.3465.