• Oil price recovered on Tuesday after a 6% decline in the previous session.

• The US announced plans to buy about 3 million barrels of oil.

• The US will release figures on employment and GDP.

The USD/CAD price analysis suggests a rebound in the Canadian dollar as oil prices rise. However, the loonie has had a terrible month with weak economic data and a massive BoC rate cut. At the same time, the greenback paused its rally as market participants waited on the sidelines for key data and the US presidential election.

Oil prices recovered on Tuesday after a 6% decline in the previous session. The rebound came after the US announced plans to buy about 3 million barrels of oil for its Strategic Petroleum Reserve. Canada is a net exporter of oil, so a rally in oil boosts the loonie.

Nevertheless, the currency has had a difficult month as Canada’s economy deteriorated. At the same time, inflation eased more than expected, pushing the Bank of Canada to implement a significant rate cut. If the trend continues, the BoC will remain its peers’ most dovish central bank.

Meanwhile, the Fed has assumed a more cautious tone. Policymakers are less dovish after a series of better-than-expected economic reports. Moreover, inflation came in higher than expected in September. Consequently, markets are pricing a higher chance of a small rate cut in November.

However, incoming data might change this outlook. This week, the US will release figures on employment and GDP. Economists expect a growth of 3.0% in the third quarter. Meanwhile, job growth might slow down from the previous month. Upbeat figures will lower the likelihood of a rat cut, while downbeat data will solidify rate-cut bets.

USD/CAD key events today

• CB Consumer Confidence
• JOLTS Job Openings
• BOC Gov Macklem Speaks

USD/CAD technical price analysis: Bearish RSI divergence

On the technical side, the USD/CAD price is pulling back after reaching the 1.3901 resistance level. However, the bullish bias remains intact since the price trades above the 30-SMA with the RSI above 50. USD/CAD has remained in a bullish trend since bulls took charge at the bottom of the 4-hour chart.

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However, momentum started declining after the uptrend hit the 1.3825 resistance level. The RSI made a bearish divergence that could lead to a reversal. However, bulls might push for a new high above 1.3901 if the SMA holds firm.

https://www.forexcrunch.com/blog/2024/10/29/usd-cad-price-analysis-cad-strengthens-as-oil-recover/