Rising oil prices supported a stronger Canadian dollar, causing the USD/CAD pair to fall back to 1.3890, awaiting a directional move.
2026-01-16 14:03:06
The US dollar edged lower against the Canadian dollar during Friday's Asian trading session, trading around 1.3890, as the Canadian dollar found support due to a rebound in oil prices. Canada is one of the world's major energy exporters, and rising oil prices are clearly beneficial to the Canadian dollar.
Recent crude oil prices have been supported by Middle East and geopolitical risks, benefiting the Canadian dollar and causing it to outperform the US dollar. Regarding geopolitical risks, Ukraine has intensified its attacks on Russian oil tankers in the Baltic Sea, with at least six tankers attacked by drones and missiles.
Expectations of energy supply disruptions pushed up crude oil prices, supporting the commodity-based Canadian dollar. However, US economic data continued to provide downward pressure on the dollar. A robust labor market and this week's retail sales data further reinforced market expectations that the Federal Reserve will keep interest rates unchanged in the near term.
Morgan Stanley analysts have pushed back the window for potential Federal Reserve rate cuts from January and April to June and September, reflecting a robust job market and persistent inflationary pressures.
Chicago Fed President Austan Goolsbee stated, "With ample evidence of a stable job market, central banks should focus on reducing inflation." San Francisco Fed President Mary Daly said, "Monetary policy is well-positioned to be adjusted appropriately in response to economic developments."
Investors are awaiting US December industrial production figures and speeches from Federal Reserve officials to find the short-term direction for the dollar.
From a daily chart perspective, the USD/CAD pair has recently retreated from a high of 1.3980 to around 1.3890, indicating a weakening of short-term bullish momentum. The price is approaching the 10-day moving average support level, while the downward sloping 5-day moving average suggests short-term corrective pressure.
The MACD fast and slow lines are still above the zero axis, but the red bars are gradually shortening, indicating that the upward momentum is weakening; the RSI has fallen to around 50, reflecting that the market is in a neutral oscillation state.
Bollinger Bands show that the price has retreated from the upper band to near the middle band, with short-term volatility decreasing. Key short-term support is in the 1.3860-1.3880 range, while resistance lies at 1.3930 and 1.3980. A decisive break above these levels could allow the US dollar to resume its upward trend; conversely, a break below support could extend the downside to around 1.3820. The overall structure leans towards a high-level consolidation correction.
Editor's Note:
The short-term movement of the USD/CAD pair is being influenced by both oil prices and expectations regarding Federal Reserve policy. Rising oil prices are providing support for the Canadian dollar, while robust US employment and retail data maintain the US dollar's fundamental advantage, leading to a period of consolidation and price fluctuations.
Technical analysis indicates weakening short-term bullish momentum, but no clear trend reversal signals have yet emerged. The exchange rate is expected to fluctuate between 1.3860 and 1.3930. Attention should be paid to the short-term impact of US industrial production data and speeches by Federal Reserve officials on the US dollar.
If oil prices continue to rise, the Canadian dollar may receive additional support; if US economic data is strong, the US dollar may rebound in the short term.
Recent crude oil prices have been supported by Middle East and geopolitical risks, benefiting the Canadian dollar and causing it to outperform the US dollar. Regarding geopolitical risks, Ukraine has intensified its attacks on Russian oil tankers in the Baltic Sea, with at least six tankers attacked by drones and missiles.
Expectations of energy supply disruptions pushed up crude oil prices, supporting the commodity-based Canadian dollar. However, US economic data continued to provide downward pressure on the dollar. A robust labor market and this week's retail sales data further reinforced market expectations that the Federal Reserve will keep interest rates unchanged in the near term.
Morgan Stanley analysts have pushed back the window for potential Federal Reserve rate cuts from January and April to June and September, reflecting a robust job market and persistent inflationary pressures.
Chicago Fed President Austan Goolsbee stated, "With ample evidence of a stable job market, central banks should focus on reducing inflation." San Francisco Fed President Mary Daly said, "Monetary policy is well-positioned to be adjusted appropriately in response to economic developments."
Investors are awaiting US December industrial production figures and speeches from Federal Reserve officials to find the short-term direction for the dollar.
From a daily chart perspective, the USD/CAD pair has recently retreated from a high of 1.3980 to around 1.3890, indicating a weakening of short-term bullish momentum. The price is approaching the 10-day moving average support level, while the downward sloping 5-day moving average suggests short-term corrective pressure.
The MACD fast and slow lines are still above the zero axis, but the red bars are gradually shortening, indicating that the upward momentum is weakening; the RSI has fallen to around 50, reflecting that the market is in a neutral oscillation state.
Bollinger Bands show that the price has retreated from the upper band to near the middle band, with short-term volatility decreasing. Key short-term support is in the 1.3860-1.3880 range, while resistance lies at 1.3930 and 1.3980. A decisive break above these levels could allow the US dollar to resume its upward trend; conversely, a break below support could extend the downside to around 1.3820. The overall structure leans towards a high-level consolidation correction.
Editor's Note:
The short-term movement of the USD/CAD pair is being influenced by both oil prices and expectations regarding Federal Reserve policy. Rising oil prices are providing support for the Canadian dollar, while robust US employment and retail data maintain the US dollar's fundamental advantage, leading to a period of consolidation and price fluctuations.
Technical analysis indicates weakening short-term bullish momentum, but no clear trend reversal signals have yet emerged. The exchange rate is expected to fluctuate between 1.3860 and 1.3930. Attention should be paid to the short-term impact of US industrial production data and speeches by Federal Reserve officials on the US dollar.
If oil prices continue to rise, the Canadian dollar may receive additional support; if US economic data is strong, the US dollar may rebound in the short term.
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