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- The US Dollar bounces up and tests session highs at 1.3540.
- The CAD rally loses steam with oil prices retreating.
- A confirmation above 1.3540 might cancel the near-term downtrend from the 1.3690 high.
The US Dollar has bounced up from the 1.3510 low on Wednesday’s early European session to retrace previous losses and test the 1.3540 resistance area which, so far, remains intact.
The Lonie loses ground with oil prices dropping
In a thin post-Christmas trading session, decline on crude prices might be weighing on the commodity-linked CAD. The US benchmark WTI trading at $78.80, about 3% below the $81.15 peak hit on Tuesday.
The oil export ban to countries applying a price top for Russian crude has failed to trigger a remarkable impact on crude prices so far. The fact that the Russian decree might not apply to countries with formal bans might have eased fears of a shortage in global supply.
On the other end, the US Dollar remains practically flat. The USD Index, which measures the value of the US Dollar against a basket of the most traded currencies is moving near session opening times.
The cooling US inflation data released last Friday, with the US Core PCE Prices Index retreating for the third consecutive month has spurred speculation about a slowdown on the Federal Reserve’s monetary tightening path, which is weighing US Dollar demand.
USD/CAD testing important resistance at 1.3540
From a technical point of view, the pair has reached a relevant resistance area at 1.3540 where the USD is testing the downward trendline resistance from December, 22 high.
With RSI and MACD indicators pointing higher on the hourly chart, a successful breach of the mentioned 1.3540 might find resistance at the 50 SMA, now around 1.3555 before visiting previous support at 1.3575.
On the downside, immediate support lies at the 1.3510 intra-day low, and below here, Dec ember 27 low at 1.3485 and December 5 low at 1.3385.
USD/CAD Hourly Chart
Technical levels to watch
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