Canadian Dollar hits fresh high since June on rising oil prices, Fed-inspired USD weakness

The Canadian Dollar (CAD) reached a new high since June due to a surge in oil prices and a weaker US Dollar (USD). The USD/CAD currency pair slipped from the top of the weekly range, experiencing follow-through selling for two consecutive days. The decline pushed the pair to its lowest level since June 10, with traders anticipating further drops below the 1.3900 mark amid negative economic indicators.

The US Federal Reserve (Fed) received a softened signal regarding an immediate interest rate hike, following a weak Producer Price Index (PPI) report and a modest Consumer Price Index (CPI) report. This, combined with the weak US Nonfarm Payrolls (NFP) report last week, increased expectations that the Fed would maintain stable interest rates, keeping the USD depressed below a two-week high and adding pressure on the CAD pair.

Geopolitical tensions, particularly the US-Iran standoff in the Middle East, contributed to higher crude oil prices, further supporting the CAD. However, the downside for the USD appeared limited, as traders still considered a potential rate hike by the year-end. The focus shifted to US economic data, including retail sales and the Preliminary University of Michigan Consumer Sentiment Index, as well as remarks from influential Federal Open Market Committee (FOMC) members.

The USD/CAD pair traded below key technical levels, such as the 100-day Simple Moving Average (SMA) and the 50.0% Fibonacci retracement, indicating further potential losses to the 61.8% Fibonacci retracement at 1.3814. On the upside, resistance was observed at the 100-day SMA, the 38.2% Fibonacci level, and the broader resistance band, which required overcoming to neutralize the current bearish trend.