USD/CAD edges lower amid rallying oil prices, holds above 1.3400 ahead of Canadian jobs data

USD/CAD retreats from the 1.3475 supply zone and is pressured by a combination of factors.
Crude Oil prices jump to a two-week high and underpin the Loonie amid a modest USD slide.
The divergent Fed-BoC outlook, recession fears lend support ahead of the Canadian jobs data.

Haresh Menghani FXStreet

The USD/CAD pair continues with its struggle to make it through the 1.3475 resistance zone and attracts some intraday selling on Friday. The intraday downfall drags spot prices to a fresh daily low, around the 1.3430 area during the first half of the European session and is sponsored by a combination of factors.

Crude Oil prices regain strong positive traction and jump back closer to the 100-day SMA resistance, hitting a two-week high. This, in turn, is seen underpinning the commodity-linked Loonie, which, along with a modest US Dollar pullback, exerts some downward pressure on the USD/CAD pair. That said, any meaningful downside seems elusive, warranting some caution for bearish traders before positioning for any further intraday depreciating move.

Worries about a deeper global economic downturn could act as a headwind for the black liquid and keep a lid on any optimism in the markets. Apart from this, expectations for further policy tightening by the Fed favour the USD bulls and support prospects for the emergence of some dip-buying around the USD/CAD pair. In fact, a slew of FOMC members, including Fed Chair Jerome Powell, stressed the need for additional rate hikes to tame inflation.

The Bank of Canada (BoC), on the other hand, is expected to be the first major central bank to pause the policy-tightening cycle following eight rate hikes in the past 11 months. The divergent Fed-BoC outlook on future rate hikes adds credence to the positive bias. Traders, however, might refrain from placing aggressive directional bets around the USD/CAD pair and prefer to wait for the release of the latest Canadian monthly employment details.

Investors will further take cues from the release of the Preliminary Michigan Consumer Sentiment Index from the US. This, along with Fed Governor Christopher Waller's speech and the broader risk sentiment, might influence the USD. Apart from this, Oil price dynamics should contribute to producing short-term trading opportunities around the USD/CAD pair. Nevertheless, spot prices seem poised to end in the positive territory for the second successive week.

Technical levels to watch

USD/CAD

Overview
Today last price	1.343
Today Daily Change	-0.0031
Today Daily Change %	-0.23
Today daily open	1.3461

Trends
Daily SMA20	1.3388
Daily SMA50	1.3495
Daily SMA100	1.3536
Daily SMA200	1.3234

Levels
Previous Daily High	1.3463
Previous Daily Low	1.3373
Previous Weekly High	1.3472
Previous Weekly Low	1.3262
Previous Monthly High	1.3685
Previous Monthly Low	1.33
Daily Fibonacci 38.2%	1.3429
Daily Fibonacci 61.8%	1.3407
Daily Pivot Point S1	1.3401
Daily Pivot Point S2	1.3342
Daily Pivot Point S3	1.3311
Daily Pivot Point R1	1.3492
Daily Pivot Point R2	1.3523
Daily Pivot Point R3	1.3583

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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