USD/CAD Price Analysis: Approaches 1.3500 amid weak oil prices, Canada Retail Sales eyed
- USD/CAD is marching towards 1.3500 as weak oil prices have impacted the Canadian Dollar.
- Monthly Retail Sales data (Feb) are expected to contract by 0.5% vs. an expansion of 1.4% recorded in January.
- USD/CAD is struggling in extending its upside journey after reaching near the 38.2% Fibo retracement at 1.3493.
The USD/CAD pair is gathering strength to recapture the psychological resistance of 1.3500 in the early Tokyo session. The Loonie asset is showing enormous strength despite a corrective move in the US Dollar Index (DXY). The USD Index has corrected sharply below 101.80 after failing to recapture the critical resistance of 102.00.
Therefore, the strength in the Loonie asset is coming from the weak Canadian Dollar, which is the outcome of diving oil prices. The oil price is on the verge of slipping below the immediate support of $77.00. The downside journey in the oil price is expected to find an intermediate support of around $75.65. The black gold has surrendered the majority of gains generated after the surprise announcement of production cuts by OPEC+.
Volatility is expected from the Canadian Dollar ahead of the release of Canada’s Retail Sales data. As per the consensus, monthly Retail Sales data (Feb) are expected to contract by 0.5% vs. an expansion of 1.4% recorded in January. Weak retail demand would provide some relief to the Bank of Canada (BoC) ahead.
USD/CAD witnessed a steep rise after breaking above the downward-sloping trendline plotted from March 24 high at 1.3804 on a two-hour scale. The Loonie asset is struggling in extending its upside journey after reaching near the 38.2% Fibonacci retracement (plotted from March 24 high at 1.3804 to April 14 low at 1.3300) at 1.3493.
The 20-period Exponential Moving Average (EMA) at 1.3458 is providing support to the US Dollar.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, indicating more upside ahead.
A decisive break above 38.2% Fibo retracement at around 1.3500 will drive the asset toward the April 10 high at 1.3554. A breach of the latter will expose the asset to round-level resistance at 1.3600.
On the flip side, a break below the round-level support of 1.3300 will drag the Loonie asset toward February 01 low at 1.3267, followed by 15 November 2022 low at 1.3226.
USD/CAD two-hour chart
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
