- USD/CAD breaks range and drops to test Wednesday’s low.
- Wall Street indexes are on the rise, which extends 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 hovers 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 increases loonie
The US dollar fell after the American session began due to an increase in market sentiment. USD/CAD broke the downward range due to a rebound in US stocks as well as in crude oil.
The Dow Jones is up 1. 41% while the Nasdaq gains 3.35%. Crude oil prices have increased by more than 33% 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%. After rising for six consecutive day, the DXY falls for the first time.
A strong barrier at 1. 2920
Technical factors were responsible for the USD/CAD decline. The break of the range gave more momentum to the loonie. 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 appears bearish in the short term. A recovery above 1. 3020 should change the outlook to neutral/bullish. Above this level, resistance awaits at 1.3045.