USD/CAD Eases on Rally Ahead of US Oil Inventory Data

Summary:

USD/CAD has eased on its rally as investors await EIA's weekly oil inventory data. Higher-than-expected jobless claims have also contributed to the easing.

USD/CAD has eased on its rally after the higher-than-expected US initial jobless claims. Analysts had expected a reading of 350,000. However, the unemployment claims came in at 373,000 compared to the previous week’s 371,000. Notably, the figures have consistently missed estimates since mid-June.

USD/CAD is also reacting to the high volatility in the crude oil market. The ongoing OPEC+ crisis has triggered uncertainty on oil supply. The looming concerns are on whether the member states will agree to output cuts into the coming year or if they will choose to release production independently. The latter option may exert pressure on crude oil price despite the recovery of global oil demand.

Investors are now focused on the US oil inventory data from EIA. As a commodity currency, the Canadian dollar tends to weaken in an environment of lower oil prices.

USDCAD technical outlook

USD/CAD has eased ahead of the US crude oil inventory data. At the time of writing, it was up by 0.59% at 1.2556. On a two-hour chart, it is trading above the 25 and 50-day EMAs. Depending on EIA’s data, it is likely to decline to the support level at 1.2500.

While it may pull back as a reaction to the stockpile data, the bullish outlook remains. On the upside, the resistance levels to watch out for are 1.2600 and 1.2700. Notably, a move below 1.2500 will invalidate this thesis.