USD/CAD approaches a key support area at 1.3415

• The Dollar remains sold weighed by Wednesday’s Fed pivot.
• The upbeat retail sales and jobless claims have failed to support the USD.
• USD/CAD approaches important support at 1.3415 with oscillators at strong oversold levels.

The US Dollar remains under strong bearish pressure on Thursday. The combination of an unexpectedly dovish Fed and a significant recovery on Oil prices is sending the pair close to the support area at 1.3410.

The upbeat US macroeconomic data seen on Thursday, with Retail sales increasing against expectations and Jobless claims declining, has failed to provide support to an ailing USD.

A dovish Fed and higher Oil prices have hammered the USD

On Wednesday the Federal Reserve hinted at the end of rate hikes, with 17 out of 19 policymakers anticipating rate cuts in 2024. The dop plot reflected a median of 75 bps cuts next year, up from the 50 bps cuts seen at September’s meeting.

Beyond that, Crude Oil, Canada’s main export has appreciated nearly $4, with the US Benchmark WTI returning above $70. This is providing additional support to the loonie.

The technical picture shows the USD under strong bearish pressure, although the strong oversold levels and the vicinity of the 1.3415 support area might allow for some correction.

Below here, the next targets would be late September lows at 1.3375 and the August 4 low at 1.3320.

On the upside, resistances are at 1.3480 and 1.3545 previous support levels. 

Technical levels to watch

This news piece was corrected on December 14 at 14:22 GMT: The term "resistance" was replaced by "support" in the title and 1.2420 was changed to 1.3415 in the fifth paragraph.