USD/CAD slumps to multi-month lows near 1.3240 as oil extends rally
- USD/CAD fell to its lowest level since late-February below 1.3250.
- Surging crude oil prices help CAD continue to gather strength.
- US Dollar Index remains deep in the red below 93.00.
The USD/CAD pair lost 70 pip on Tuesday and extended its slide on Wednesday with the commodity-sensitive loonie capitalizing on surging crude oil prices. As of writing, the pair was trading at its lowest level in more than five months at 1.3243, losing 0.55% on a daily basis.
The risk-on market environment on heightened hopes of US lawmakers reaching an agreement on the next coronavirus aid bill provides a boost to crude oil prices on Wednesday. At the moment, the barrel of West Texas Intermediate (WTI) is gaining nearly 4% and trading above $43 for the first time since March 6th.
On the other hand, the greenback is struggling to find demand as a safe-haven and allow the bearish pressure on USD/CAD to remain intact. Ahead of the monthly ADP Employment Change and the ISM's Non-Manufacturing PMI data from the US, the US Dollar Index is down 0.4% on the day at 92.90.
Meanwhile, the Canadian economic docket will feature International Merchandise Trade as well as Imports and Exports figures on Wednesday.
USD/CAD near-term outlook
Credit Suisse analysts think that USD/CAD face the next support at 1.3233 before extending its slide.
“Big picture, the ‘measured wedge objective’ is seen lower at 1.3206, just shy of a more important support area at 1.3202/3191,” analysts noted. “Resistance is seen initially at 1.3308, then 1.3331/35, which we look to now ideally cap. Above would ease the immediate downside pressure and see resistance next at 1.3399, ahead of 1.3421, but with fresh sellers expected here.”
Additional technical levels to consider