USD/CAD struggles near weekly low, around mid-1.2600s amid bullish oil prices/weaker USD

A combination of factors dragged USD/CAD lower for the third successive day on Wednesday.
Bullish oil prices underpinned the loonie and exerted pressure amid sustained USD selling bias.
The disappointing release of the US ADP report did little to provide any respite to the USD bulls.

Haresh Menghani FXStreet

The USD/CAD pair witnessed fresh selling during the early North American session and dropped to a fresh weekly low, around mid-1.2600s in reaction to the dismal US ADP report.

Following an early uptick to the 1.2700 mark, the USD/CAD pair turned lower for the third successive day on Wednesday and was pressured by a combination of factors. Crude oil prices jumped to a fresh seven-year high, which continued underpinning the commodity-linked loonie. This, along with the heavily offered tone surrounding the US dollar, exerted downward pressure on the major.

Oil prices broke out of a one-week-old consolidative trading range and shot to a fresh seven-year high after the OPEC+ announced to increase March oil production by 400K barrels per day. This, along with the post-pandemic recovery in fuel demand, should keep a tight supply condition. Apart from this, the conflict between Russia and the West over Ukraine acted as a tailwind for the black gold.

On the other hand, the greenback was weighed down by diminishing odds for a 50 bps Fed rate hike in March and lost additional ground following the release of disappointing US macro data, Automatic Data Processing (ADP) reported this Wednesday that the US private-sector employment declined by 301K in January as against market expectations for an addition of 207K jobs and the 807K previous.

This, along with weaker US Treasury bond yields and a generally positive tone around the equity markets, further undermined the greenback's relative safe-haven status. The fundamental backdrop supports prospects for a further near-term depreciating move for the USD/CAD pair, though the lack of any follow-through selling warrants some caution for aggressive bearish traders.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2661
Today Daily Change	-0.0026
Today Daily Change %	-0.20
Today daily open	1.2687

Trends
Daily SMA20	1.2623
Daily SMA50	1.2716
Daily SMA100	1.2625
Daily SMA200	1.2509

Levels
Previous Daily High	1.2727
Previous Daily Low	1.2655
Previous Weekly High	1.2797
Previous Weekly Low	1.2554
Previous Monthly High	1.2814
Previous Monthly Low	1.2451
Daily Fibonacci 38.2%	1.2682
Daily Fibonacci 61.8%	1.2699
Daily Pivot Point S1	1.2652
Daily Pivot Point S2	1.2618
Daily Pivot Point S3	1.2581
Daily Pivot Point R1	1.2724
Daily Pivot Point R2	1.2761
Daily Pivot Point R3	1.2796

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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