USD/CAD tumbles to 1.2920, trims weekly gains
- USD/CAD breaks range and drops to test Wednesday’s low.
- Wall Street indices rise sharply, extending the rebound.
- Crude oil prices rise more than 3%, WTI approaches $110.00.
The USD/CAD broke under 1.2990 and quickly tumbled to 1.2923, a two-day low. It is hovering around 1.2945/50, still up for the week but significantly off highs. Still, the USD/CAD pair is on its way to the highest weekly close since November 2021.
Market sentiment boosts loonie
The US dollar dropped after the beginning of the American session amid an improvement in market sentiment. The rebound in US stocks and in crude oil helped USD/CAD break the range to the downside.
The Dow Jones is up by 1.41% while the Nasdaq gains 3.35%. Crude oil prices are up more than 3%. The WTI barrel trades at $109.38, more than $10 above Wednesday’s low.
The US Dollar Index is pulling back from multi-year highs. Earlier on Friday, it reached levels above 105.00 and at the time of writing, it trades at 104.65 down 0.10%. The DXY is falling for the first time after rising for six consecutive days.
A strong barrier at 1.2920
Technical factors contributed to the decline in USD/CAD. The break of the range gave more momentum to the loonie. The slide found support at the 1.2920 area that also contained losses on Wednesday. The 200-hour Simple Moving Average is also seen around that area. A break under 1.2920 should open the doors for a test of 1.2900. Below, the next support might be located at 1.2865/70.
The USD/CAD looks bearish in the very short term. However, a recovery above 1.3020 should change the outlook to neutral/bullish. Above this level, resistance awaits at 1.3045.