On Thursday (June 12th), in the early Asian trading session, the latest price of USD/CAD was 1.3669, down 0.01%, with the opening price at 1.3671. The continuous rise in international oil prices has injected strong momentum into the Canadian dollar.
As the world’s fourth-largest crude oil exporter, the positive correlation between the Canadian currency and oil prices has once again emerged. The WTI crude oil breaking through the key price level directly boosted the Canadian dollar exchange rate. Meanwhile, the Bank of Canada’s monetary policy stance has turned hawkish, and market expectations for further interest rate cuts in the short term have significantly cooled. Interest rate futures pricing indicates that the probability of a rate cut in July has dropped to less than 30%. This adjustment in monetary policy expectations provides additional support for the Canadian dollar.
However, analysts point out that in the current environment, the trend of the Canadian dollar is still mainly dominated by two external factors: the first is the overall trend of the US dollar. The fluctuations in the US dollar caused by changes in the expected policies of the Federal Reserve remain the key variable affecting USD/CAD.
The second is whether international oil prices can maintain an upward trend, especially against the backdrop of the adjustment of OPEC+’s production policy. If the crude oil market remains strong, the Canadian dollar may continue its relatively excellent performance.
Technical Analysis of USD/CAD
The USD/CAD pair is unlikely to accumulate momentum above the 23.6% Fibonacci retracement level of its recent pullback from the psychological level of 1.4000, which corresponds to the key 200-day simple moving average (SMA) in the technical analysis. Furthermore, the technical indicators on the daily chart are deeply trapped in the negative territory, which needs to remind bullish traders to remain cautious.
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