• Economic data revealed that Canada’s January Ivey PMI rose to the highest point in 9 months.

• According to Mcklem, Canada needs high interest rates for longer to lower inflation.

• Oil prices have risen due to the recent efforts to reduce tensions in the Middle East.

The USD/CAD price analysis reveals a bearish outlook as the Canadian dollar stands tall, bolstered by the surge in oil prices. Meanwhile, the US dollar is on shaky ground as Treasury yields fall back from their recent highs.

The pair has declined since the previous session due to several factors that supported the Canadian dollar. These factors included upbeat data from Canada, a rise in oil prices, and hawkish remarks from Bank of Canada Governor Macklem.

Notably, economic data revealed that Canada’s January Ivey PMI rose to the highest point in 9 months. The rise came as economic activity expanded rapidly. Consequently, investors pushed back bets for BoC rate cuts.

Moreover, a speech by BoC governor Macklem on Tuesday showed that the central bank was not in any hurry to cut interest rates. According to him, Canada needed high interest rates for longer to lower inflation. Additionally, he noted that Canada’s economy was vulnerable to volatility in oil prices due to tensions in the Middle East. This could have a significant impact on inflation in the country.

Meanwhile, oil prices have risen due to the recent efforts to ease tensions in the Middle East. Investors are keenly watching and waiting to see the outcome of diplomatic efforts to stop the Gaza war.

USD/CAD key events today

Investors will keep watching developments in the Middle East as there won’t be any major economic releases today.

USD/CAD technical price analysis: Retreat from 1.3525 barrier

On the technical side, USD/CAD has pulled back sharply after attempting to break above the 1.3525 key resistance level. However, the bullish bias is still strong because the pullback is above the 30-SMA. Additionally, the RSI is in bullish territory. Therefore, the decline might pause at the nearest support level.

Currently, the price is heading for a solid support zone comprising the 30-SMA and the 0.5 Fib retracement level. At this point, the bulls are likely waiting to make another swing high. However, there is a chance the 1.3525 resistance will hold firm. In that case, the price might fall back to the 1.3375 support.

https://www.forexcrunch.com/blog/2024/02/07/usd-cad-price-analysis-canadian-dollar-gains-amidst-oil-rally/