Oil price rebound supports Canadian dollar; USD/CAD awaits stabilization.
2026-01-23 14:25:59
The US dollar traded around 1.3790 against the Canadian dollar during Friday's Asian session. This followed four consecutive days of declines, primarily driven by a stronger Canadian dollar supported by oil prices and external uncertainties weighing on the US dollar.
Regarding oil prices, West Texas Intermediate (WTI) crude rebounded to around $59.60 per barrel, after falling more than 2% in the previous trading day. The CEO of Saudi Aramco stated that global oil demand remains strong, particularly with record-high consumption in emerging economies, and expects further growth in 2026, easing market concerns about oversupply.
The upside potential for the US dollar against the Canadian dollar is limited, also because the dollar is under pressure from external risk factors. Recent escalation of trade and geopolitical tensions between the US and Europe has further exacerbated these factors.
At the same time, Europe may use its holdings of US assets for speculation, exacerbating market uncertainty about the dollar.
On the macro level, US economic data was robust. Third-quarter GDP annualized growth was revised upward to 4.4%, higher than the market expectation of 4.3%, indicating strong economic expansion momentum. Initial jobless claims were 200,000, lower than the expected 212,000, but slightly higher than the previous value of 199,000, reflecting the continued robustness of the labor market.
Overall, USD/CAD is expected to maintain a consolidation pattern in the short term. The rebound in oil prices is supporting the Canadian dollar, while the US dollar is under pressure from external uncertainties in the short term, and short-term volatility may increase. The market needs to pay attention to crude oil supply and demand, as well as US macroeconomic and policy signals.
On the daily chart, USD/CAD is consolidating within the 1.3780-1.3820 range, with the technical structure showing signs of recovery after a continuous decline. The price holding above the key support level of around 1.3775 indicates a weakening of short-term bearish momentum.
The moving average system shows that short-term moving averages are gradually stabilizing or slightly rising, forming initial support. The Relative Strength Index (RSI) is hovering in the neutral-to-low range, suggesting limited downward pressure, but a short-term battle between bulls and bears continues. On the upside, if the exchange rate breaks through the 1.3820 resistance zone, it may test the 1.3850-1.3870 level in the short term.
On the downside, if the price breaks below the 1.3775 support level, it may fall back to the 1.3740 area, where bearish pressure will reappear.
Editor's Note:
The recent movement of the USD/CAD pair has been primarily influenced by both oil price volatility and risk sentiment regarding the US dollar. The recovery in oil prices has strengthened support for the Canadian dollar, but the US dollar remains weighed down by geopolitical and trade uncertainties.
In the short term, USD/CAD is more likely to remain range-bound. Attention should be paid to WTI crude oil price movements and the catalytic effect of US macroeconomic and policy news on the exchange rate. Technical support is solid; if oil prices continue their strength, the Canadian dollar may strengthen further, while the US dollar may see a short-term rebound if it receives safe-haven appeal or policy support.
Regarding oil prices, West Texas Intermediate (WTI) crude rebounded to around $59.60 per barrel, after falling more than 2% in the previous trading day. The CEO of Saudi Aramco stated that global oil demand remains strong, particularly with record-high consumption in emerging economies, and expects further growth in 2026, easing market concerns about oversupply.
The upside potential for the US dollar against the Canadian dollar is limited, also because the dollar is under pressure from external risk factors. Recent escalation of trade and geopolitical tensions between the US and Europe has further exacerbated these factors.
At the same time, Europe may use its holdings of US assets for speculation, exacerbating market uncertainty about the dollar.
On the macro level, US economic data was robust. Third-quarter GDP annualized growth was revised upward to 4.4%, higher than the market expectation of 4.3%, indicating strong economic expansion momentum. Initial jobless claims were 200,000, lower than the expected 212,000, but slightly higher than the previous value of 199,000, reflecting the continued robustness of the labor market.
Overall, USD/CAD is expected to maintain a consolidation pattern in the short term. The rebound in oil prices is supporting the Canadian dollar, while the US dollar is under pressure from external uncertainties in the short term, and short-term volatility may increase. The market needs to pay attention to crude oil supply and demand, as well as US macroeconomic and policy signals.
On the daily chart, USD/CAD is consolidating within the 1.3780-1.3820 range, with the technical structure showing signs of recovery after a continuous decline. The price holding above the key support level of around 1.3775 indicates a weakening of short-term bearish momentum.
The moving average system shows that short-term moving averages are gradually stabilizing or slightly rising, forming initial support. The Relative Strength Index (RSI) is hovering in the neutral-to-low range, suggesting limited downward pressure, but a short-term battle between bulls and bears continues. On the upside, if the exchange rate breaks through the 1.3820 resistance zone, it may test the 1.3850-1.3870 level in the short term.
On the downside, if the price breaks below the 1.3775 support level, it may fall back to the 1.3740 area, where bearish pressure will reappear.
Editor's Note:
The recent movement of the USD/CAD pair has been primarily influenced by both oil price volatility and risk sentiment regarding the US dollar. The recovery in oil prices has strengthened support for the Canadian dollar, but the US dollar remains weighed down by geopolitical and trade uncertainties.
In the short term, USD/CAD is more likely to remain range-bound. Attention should be paid to WTI crude oil price movements and the catalytic effect of US macroeconomic and policy news on the exchange rate. Technical support is solid; if oil prices continue their strength, the Canadian dollar may strengthen further, while the US dollar may see a short-term rebound if it receives safe-haven appeal or policy support.
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