USD/CAD closes in on another test of the 23.6 retracement level of the recent swing higher since the start of the year
The failure to hold a firm break above 1.3300 and push past resistance around 1.3319-28 has seen USD/CAD pull back and price is once again closing in on a test of the 23.6 retracement level @ 1.3240 currently.
The loonie is the lead gainer in the major currencies space, owing to firmer oil prices today as we see WTI rise by 1.2% to just above $52.00 currently on hopes that Russia will eventually cave and commit to additional output cuts as proposed by OPEC+.
For USD/CAD, there is further support seen at the 200-day MA (blue line) @ 1.3219 and that will be the key level to watch ahead of the weekend and in case the loonie builds any further momentum if oil breaks higher.
Let’s take a look at the oil chart in case as well:
Price is managing to keep afloat after testing waters under $50 for now, but there is some key near-term resistance from the 6 February high @ $52.20.
From a technical perspective, that may help to limit daily gains today but a firm break above that could see oil start to run towards the 23.6 retracement level @ $53.17 next and that may well keep the loonie underpinned if that happens.
However, the fundamental logic is that any upside potential in oil is still contingent on Russia’s decision ahead of the weekend. If we do see the cooperation between Russia and OPEC fall apart, that could spell disaster for oil prices as confidence gets sapped.
In turn, the loonie could be caught out on spillover effects with USD/CAD buyers to eye for a move back above 1.3300.
As for the dollar side of the equation today, just be mindful of US retail sales data later today.