Canadian dollar falls on widening rate differentials as headwinds loom for loonie
'The loonie's weakness ... is largely a function of the (United States) dollar's strength,' said Karl Schamotta
The Canadian Dollar continues to depreciate despite a rebound in oil prices. On Wednesday, West Texas Intermediate (WTI) rose above $90 and gained 0.70%, but this positive movement did not provide enough support for the Canadian Dollar against a stronger US Dollar. USD/CAD traded around 1.4090, edging closer to its recent highs, as the pair remains near its highs due to a robust US Dollar.
The Federal Reserve raised interest rates for the first time in three years, signaling a further increase, which maintains a restrictive monetary policy that supports the Greenback. However, weaker oil prices help ease concerns about accelerated US inflation, limiting the appeal of the US Dollar and restraining further gains in USD/CAD.
The pair is caught between the US Dollar's strength and the Canadian Dollar's potential relief from higher oil prices. USD/CAD trades at 1.4089, maintaining a bullish tone near both the 100-period and 200-period SMAs. On the upside, resistance lies at 1.4100 and 1.4130, while on the downside, support is found around 1.4025, supported by the 100-period SMA. The technical analysis, aided by AI, reveals a cautiously optimistic outlook for USD/CAD.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
