USD/CAD crawls beyond 1.3550 on risk aversion and lower oil prices
- The Dollar extends gains favoured by risk aversion.
- Lower oil prices are weighing on the Canadian Dollar.
- USD/CAD’s corrective recovery, might find resistance at 1.3600 and 1.3620.
The US Dollar keeps a moderate bid tone on Tuesday’s European session and is putting a distance from the two-month highs, at the 1.3475 area hit on Monday.
The Greenback is drawing support from the risk-averse market sentiment. Investors are reluctant to place risky bets awaiting the release of US employment data to confirm that the Federal Reserve’s tightening cycle is over.
Lower oil prices are hurting the Canadian Dollar
Beyond that, the lower oil prices, with the IUS benchmark WTI hovering right above five-month lows, at $72.20 is acting as a headwind to the loonie.
In Canada, the BoC is widely expected to keep rates at the current 5% level and start rolling back the tightening cycle in early 2024.
From a technical perspective, the pair is correcting higher, after a 3% sell-off in November. The next resistances are likely to be at the 4h 50 SMA, at 1.3600 ahead of the November 30 high, 1.3622 and 1.3700.
Supports are 1.3520 and the December 4 low at 1.3475.
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
