Yesterday, the USDCAD had a down-and-up day that largely mirrored the moves in crude oil. Earlier in the session, the pair moved lower as oil prices surged, strengthening the Canadian dollar. Later, as oil began to come off the boil, USDCAD rebounded, reflecting a softer CAD.
Today, oil is again trading higher, and USDCAD is moving lower (stronger CAD). However, the move is not just about oil—technicals are also playing an important role.
Following the sharp trend move down from the Thursday high at 1.37155 to the low at 1.35248, a corrective rebound would typically look to retrace at least 38.2% of that decline. In trading today, the price briefly pushed three pips above that 38.2% retracement at 1.3598, reaching a high of 1.3601, before sellers stepped back in and pushed the pair lower.
The pair has since moved down to a session low near 1.3543. The next key target area comes between 1.35316 and 1.35219, which includes yesterday’s low and a prior swing level from earlier in February. A move below that zone would increase the bearish bias and have traders looking toward the cluster of lows from late January and early February between 1.3503 and 1.3482.
In the video above, I walk through the technical story behind USDCAD, explaining the key levels, the bias for traders, and the “why” behind the price action from a technical perspective.
