USD/CAD rallies to fresh 2-month highs above 1.3180 on stronger USD and oil sell-off
|- Greenback gains traction following FOMC rate statement.
- Crude oil weakness continues to hurt the loonie.
- USD/CAD approaches the 1.32 handle in the NA session.
The USD/CAD pair gained more than 70 pips in the last hour as the greenback gathered strength after the Fed decided to keep the policy rate unchanged and didn't mention any risks related to recent market volatility in its policy statement. As of writing, the pair was up 0.53% on the day at 1.3182.
"Information received since the Federal Open Market Committee met in September indicates that the labour market has continued to strengthen and that economic activity has been rising at a strong rate," the FOMC stated and didn't give any hints regarding the downside risks related to Trump administration trade policy or the flattening yield curve, which some experts see as a warning sign for economic slowdown. Boosted by the Fed's remarks, the US Dollar Index advanced to a 10-day high at 96.74 and was last seen up 0.55% on the day at 96.70.
On the other hand, the ongoing crude oil sell-off continues to hurt the demand for the commodity-sensitive loonie. With the oil production in the U.S. hitting record levels and Iran sanctions not impacting the global supply as expected, the barrel of WTI fell below $61 in the NA session and was last down 1.6% at $60.60.
Additionally, major equity indexes in the U.S. reversed their course and fell back into the negative territory in the last hour to put some extra bearish pressure on the risk-related pair.
Technical levels to consider
1.3200 (psychological level) aligns as the first resistance ahead of 1.3225 (Sep. 6 high) and 1.3290 (Jul. 19 high). On the downside, supports are located at 1.3100 (20-DMA), 1.3020 (50-DMA) and 1.2990 (200-DMA).
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