Canadian Dollar finds support from Oil surge despite Fed rate hike bets
USD/CAD trades around 1.3810 on Monday at the time of writing, down 0.15% on the day. The pair comes under some pressure as the sharp rise in Oil prices supports the Canadian Dollar (CAD), although underlying strength in the US Dollar (USD) limits the downside.
On Monday, the Canadian Dollar (CAD) showed resilience, trading around 1.3810 against the US Dollar (USD), despite expectations of a Federal Reserve (Fed) rate hike. Oil prices played a significant role in supporting the CAD, as West Texas Intermediate (WTI) oil surged above the $90 mark, gaining more than 1%. Canada, a major oil producer and exporter, benefits from higher crude prices, which improve the country's export revenue outlook and demand for its currency.
The US Dollar, on the other hand, retained support from positive economic data, such as the strong Nonfarm Payrolls (NFP) report, which bolstered expectations of a Fed rate increase at its September meeting. Geopolitical tensions, particularly in the Middle East, added to the USD's allure as a safe-haven currency. Analysts noted that while the CAD held below key moving averages, the Relative Strength Index (RSI) suggested a soft but not oversold downside momentum.
The pair faced immediate resistance near 1.3842, with further support around 1.3765. The technical outlook for other currencies, such as AUD/USD and USD/JPY, also showed mixed trends, with AUD/USD consolidating near 0.7200 and USD/JPY sliding toward seven-month lows.
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