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USD/CAD Extends Rebound Amid Strong U.S. Data and Oil Pullback
Traders' Opinions
Summary:
USD/CAD climbs toward monthly highs as strong U.S. economic data and weaker oil weigh on the Canadian Dollar, while technical signals suggest further near-term upside.
Buy
TradingUSDCAD
EXP
1.39000
Entry Price
1.40000
TP
1.38000
SL
1.38878 -0.00260 -0.19%
0
Point
Flat
1.38000
SL
CLOSING
1.39000
Entry Price
1.40000
TP
The U.S. dollar strengthened against the Canadian dollar on Thursday, as robust economic indicators from the United States combined with a decline in oil prices to support the Greenback, pushing the USD/CAD pair higher toward its monthly peaks. The pair rose over 0.2% in early European trading, extending its recovery from weekly lows around 1.3850 to breach the 1.3900 mark, inching closer to the 1.3920 monthly high.
The uptick in the USD/CAD comes after a series of encouraging U.S. economic releases on Wednesday, reinforcing expectations that the Federal Reserve is likely to maintain its current monetary policy stance in the near term. Producer Price Index (PPI) data for November showed inflationary pressures firming rather than easing. Headline PPI rose 3% year-on-year, exceeding the prior month’s 2.8% and defying market expectations of a slowdown to 2.7%. Core PPI, which strips out volatile food and energy prices, mirrored the trend, climbing to 3% from 2.9%, compared with the consensus forecast of 2.7%.
Adding to the bullish sentiment for the U.S. dollar, Retail Sales figures from the Census Bureau showed a robust 0.6% rebound in November, following a modest 0.1% decline in October. This performance surpassed market expectations of a 0.4% increase and highlighted resilient consumer demand, which has remained a key pillar supporting the U.S. economy despite moderating inflationary pressures reflected in the Consumer Price Index (CPI) data earlier in the week. Analysts noted that the combination of accelerating producer prices and strong retail consumption points to a U.S. economy capable of sustaining growth without immediate Fed intervention.
Meanwhile, the Canadian dollar faced additional headwinds as oil prices declined nearly 2% during the session. Reports from U.S. President Donald Trump indicated that repression against protesters in Iran is easing, reducing the likelihood of an immediate military intervention in the region. Market participants interpreted this as a bearish signal for crude oil, given the geopolitical risk premium previously priced into Brent and WTI futures. Since Canada is a major oil exporter, softer energy prices weighed on the loonie, amplifying gains in USD/CAD.
Technical Analysis
From a technical standpoint, USD/CAD’s rebound is gaining traction. The pair found support near a short-term bullish corrective trendline and traded above the 50-day exponential moving average (EMA50), signaling renewed upward momentum. Relative strength indicators, which had recently approached oversold levels, are now generating positive readings, suggesting further near-term upside. Traders noted that a sustained break above the 1.3920 resistance could open the door for additional gains toward the next key technical barrier near 1.4000.
TRADE RECOMMENDATION
BUY USDCAD
ENTRY PRICE: 1.3900
STOP LOSS: 1.3800
TAKE PROFIT: 1.4000
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