USD/CAD stuck in a narrow range above mid-1.3100s, rising Oil prices act as a headwind

USD/CAD lacks any firm intraday direction and oscillates in a narrow trading band on Friday.
An uptick in Oil prices underpins the Loonie and caps the upside amid subdued USD demand.
Canadian Retail Sales eyed for some impetus, though the focus remains on the FOMC next week.

Haresh Menghani FXStreet

The USD/CAD pair struggles to capitalize on the previous day's late rebound from the 1.3120-1.3115 region, or the weekly low and oscillates in a narrow band through the Asian session on Friday. Spot prices currently trade around the 1.3165-1.3170 area, nearly unchanged for the day.

Crude Oil prices gain some positive traction for the second straight day, which underpins the commodity-linked Loonie and turns out to be a key factor acting as a headwind for the USD/CAD pair. Hopes that new stimulus measures from China will boost fuel demand in the world's largest oil importer, along with the prospect of tighter global supplies, continue to act as a tailwind for the black liquid.

Apart from this, subdued US Dollar (USD) price action further contributes to capping the upside for the USD/CAD pair. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, consolidates the overnight strong gains to over a one-week high and for now, seems to have stalled the recent goodish recovery move from its lowest level since April 2022 touched earlier this week.

The downside for the USD, however, seems limited in the wake of the upbeat US macro data released on Thursday, which continues to flash strength in the US labour market and supports prospects for further tightening by the Federal Reserve (Fed). Furthermore, investors remain sceptic about whether the Fed will commit to a more dovish policy stance or stick to its forecast for a 50 bps rate hike this year.

This, in turn, might hold back traders from placing aggressive directional bets ahead of the crucial FOMC monetary policy decision, scheduled to be announced at the end of a two-day meeting on Wednesday. In the meantime, traders on Friday will take cues from the release of the monthly Canadian Retail Sales data, which might provide some impetus to the USD/CAD pair later during the early North American session.

Nevertheless, spot prices seem poised to end in the red for the second straight week and remain well within the striking distance of the lowest level since September 2022, just below the 1.3100 round-figure mark touched last week.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3169
Today Daily Change	-0.0003
Today Daily Change %	-0.02
Today daily open	1.3172

Trends
Daily SMA20	1.3221
Daily SMA50	1.334
Daily SMA100	1.3455
Daily SMA200	1.348

Levels
Previous Daily High	1.3194
Previous Daily Low	1.312
Previous Weekly High	1.3304
Previous Weekly Low	1.3093
Previous Monthly High	1.3585
Previous Monthly Low	1.3117
Daily Fibonacci 38.2%	1.3166
Daily Fibonacci 61.8%	1.3148
Daily Pivot Point S1	1.313
Daily Pivot Point S2	1.3087
Daily Pivot Point S3	1.3055
Daily Pivot Point R1	1.3205
Daily Pivot Point R2	1.3237
Daily Pivot Point R3	1.328

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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