- USDCAD is attempting to recover today after a prolonged downtrend
- Oil.WTI rallied on Wednesday following the drawdown in DOE inventory
- Market is now testing the $49 handle after touching highest level since May
The recovery in the oil price has boosted the Canadian dollar in recent weeks with the decision to raise rates from the Bank of Canada earlier this month providing a further boon to the Loonie. However the USDCAD pair has run into a potentially major long term support level and today there’s been an attempt to bounce. Price hit a low of 1.2415 yesterday following the Fed meeting before rallying almost 100 pips during today’s European session. A falling trendline from the start of the month is now being tested and if price can move above here then the outlook would become more positive for longs.
The USDCAD has risen to test a falling trendline that has contained rallies in recent weeks
On longer term charts the significance of the area around today’s low becomes apparent with the 1.24 region having previously been an important swing level.
The Canadian dollar has traditionally exhibited a positive correlation with the oil price, and the recent rise in the latter has contributed to the former also gaining. The price of crude has been on the way up lately with Oil.WTI attempting to make it a fourth successive day of gains. Price is now probing the $49 a barrel level once more and the market has recovered the majority of the declines seen since the OPEC meeting. If we look at price in terms of closing levels the market has now recovered 70.6% of the declines seen since the meeting at the end of May.
The majority of the declines seen since the OPEC meeting have now been recovered