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Retreating Oil Price and USDCAD

Market Analysis

USDCAD, H1                   

USDCAD made a fresh high for the year at 1.3520 today, extending the breakout gains from the recent consolidation. Strong U.S. data, hawkish Fed speakers, Trump’s promise of a $1 tln infrastructure spend, along with the recent ebb in oil prices, have been underpinning the advance.  USOil has broken below $50.00, the first time below this level since mid December, making a low at $48.80, a level last seen in late November. Crude is presently above the low at $49.22 bid, which is still a net decline of 2.2% on the day and a 7.7% loss on the week so far. The price action over the last day represents a downside break of the narrow range that had been persisting since early January, and there is a risk of further downside as futures data has been showing speculative accounts holding record long positions in recent weeks. The downside spark came yesterday, with data showing a further record high in U.S. crude inventories following bigger than expected stockpiling in the latest reporting week. Data this week also showed that Russia may be falling short of complying with its share of the OPEC-led move to trim supply.

The daily resistance on USDCAD and next target is 1.3562. On the intraday chart the 5 period EMA is supporting the pair in the H1 and H4 timeframes. Short term the H1 chart is showing signs of being overbought with the RSI at 81 and the price breaking the top of the Bollinger band , however  further strength could be anticipated with a short term target of 1.3540-50 could be expected with the 5 period EMA as a trailing support area. The MACD remains positive

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Stuart Cowell

Senior Market Analyst

HotForex

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