USD/CAD Edges Up from 1.3690 as Weaker Oil Prices Pressure Canadian Dollar

USD/CAD Edges Up from 1.3690 as Weaker Oil Prices Pressure Canadian Dollar

The USD/CAD pair is trading modestly higher during early Wednesday European hours, as crude oil price weakness continues to drag down the Canadian Dollar (CAD). The pair has bounced from the 1.3690 area, trimming earlier losses and showing signs of stabilizing after a two-day decline.

Oil Price Slide Weighs on the Loonie

Canada’s oil-linked currency is under pressure, with West Texas Intermediate (WTI) crude prices now 16% lower than their Monday peak, following the Israel-Iran ceasefire. The easing geopolitical tension has helped cool crude markets, taking away a key support for the commodity-sensitive Canadian Dollar.

US Dollar Gains Capped by Fed Easing Outlook

While the US Dollar (USD) remains soft overall due to weak economic data and rising expectations of a Federal Reserve interest rate cut, the USD/CAD reversal has been more shallow. Traders are factoring in the oil-CAD correlation more heavily than broad USD weakness in this particular pairing.

Risk Appetite and Market Tone

Global market sentiment remains cautiously optimistic, with risk appetite supported by the ceasefire agreement in the Middle East. However, the absence of major economic data keeps trading relatively range-bound, and USD/CAD remains sensitive to commodity market shifts.

Technical Levels to Watch

• Support: 1.3665
• Resistance: 1.3730 and 1.3750
• Trend: Cautiously bullish short term, neutral longer term

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