HFM information and reviews
Octa information and reviews
FXCC information and reviews
FxPro information and reviews
FBS information and reviews
Vantage information and reviews

USD/CAD Rebounds as US Dollar Gains and Oil Prices Weigh on the Canadian Dollar

1 January 2024 Written by Anna Segal  Finance Industry Expert Anna Segal

The USD/CAD pair experienced a notable rebound, approaching the 1.3260 mark in the early New York trading session. This recovery was catalyzed by a resurgence in the US Dollar Index (DXY), coupled with a significant drop in oil prices. The pair's upswing from the key support level at 1.3180 was also influenced by the Loonie's response to these broader market dynamics. The overall market sentiment appears subdued, with the S&P500 expected to open flat, reflecting a quiet market atmosphere amidst the festive season.

Despite this, the USD Index has shown recovery, reaching near 101.40. However, the broader market bias remains bearish, with investors anticipating the Federal Reserve (Fed) to initiate interest rate cuts earlier than previously expected.

Federal Reserve's Anticipated Rate Cuts in 2024

Market probabilities, as indicated by the CME Fedwatch tool, suggest a 73% chance of the Fed reducing interest rates by 25 basis points to 5.00-5.25% as early as March 2024. The likelihood of continued rate cuts into May is also high at 72%. Factors such as easing price pressures and a softening labor market in the US are influencing Fed policymakers to lean towards rate reductions. Recent data, including a rise in Initial Jobless Claims to 218K – exceeding both the consensus estimate of 210K and the previous figure of 206K – underscore these labor market challenges.

Impact of Oil Prices on the Canadian Dollar

On the Canadian side, the recent decline in oil prices has put pressure on the Canadian Dollar (CAD). The resumption of commercial shipping activities through the Red Sea route has contributed to the drop in oil prices. As Canada is a significant oil exporter to the United States, fluctuations in oil prices directly impact the CAD's strength. Therefore, the recent downturn in oil prices has weakened demand for the Canadian Dollar.

USD/CAD Technical Outlook and Key Levels

From a technical perspective, the USD/CAD pair's recovery towards 1.3260 signals a potential reversal of its recent downtrend. Investors and traders will be closely monitoring the pair for signs of sustained momentum, particularly in light of the evolving economic landscape in both the US and Canada. Key levels to watch include immediate support around the 1.3180 mark and resistance near the 1.3260 level.

Conclusion: Navigating a Fluid Forex Environment

As the USD/CAD pair navigates through these complex market conditions, shaped by monetary policy expectations and commodity price shifts, investors are advised to stay attuned to upcoming economic data and policy announcements. The interplay between US economic indicators, Federal Reserve policy expectations, and the oil market's influence on the Canadian Dollar will be pivotal in determining the pair's trajectory as the new trading year unfolds.

Share: Tweet this or Share on Facebook


Canadian Dollar Seeks Opportunities for Growth
Canadian Dollar Seeks Opportunities for Growth

The USDCAD pair remains within a sideways range, with the Canadian dollar occasionally showing a tendency to strengthen.

14 Mar 2024

USDCAD Faces Potential Bearish Retracement Amid Technical Indicators
USDCAD Faces Potential Bearish Retracement Amid Technical Indicators

The USDCAD currency pair finds itself in a precarious position as it grapples with key technical levels and indicators that suggest a possible bearish retracement. In this analysis, we delve into the current status of USDCAD...

26 Jan 2024

USD/CAD Retreats to Near 1.3380 as Crude Prices Surge
USD/CAD Retreats to Near 1.3380 as Crude Prices Surge

The USD/CAD currency pair is experiencing a retracement of recent gains during the Asian session on Friday, with prices edging lower to hover around the 1.3380 mark...

12 Jan 2024

USD/CAD Rises to 1.3380 Amid Declining Crude Prices and Mixed US Economic Data
USD/CAD Rises to 1.3380 Amid Declining Crude Prices and Mixed US Economic Data

The USD/CAD currency pair has been on an upward trajectory, reaching around 1.3380 in the European trading session on Monday. This movement is primarily influenced...

8 Jan 2024

USDCAD Signals a Bullish Trend in the Short-Term Amid Mixed Technical Indicators
USDCAD Signals a Bullish Trend in the Short-Term Amid Mixed Technical Indicators

Introduction The USDCAD currency pair has been exhibiting signs of a bullish trend in the short term as it approaches the critical 20-day Simple Moving Average (SMA)...

5 Jan 2024

USDCAD Wave Analysis: Preparing for a Downward Spiral
USDCAD Wave Analysis: Preparing for a Downward Spiral

The USDCAD currency pair finds itself under the grip of bearish forces as it plunges through the critical support level at 1.3410. This breach signals a potentially...

20 Dec 2023

MultiBank Group information and reviews
MultiBank Group
XM information and reviews
FP Markets information and reviews
FP Markets
FXTM information and reviews
AMarkets information and reviews
BlackBull information and reviews

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.