3 reasons why the USD/CAD is holding steady
- The USD/CAD pair jumped even as the Freedom Convoy started waning.
- Police have started towing trucks and arresting protesters.
- Crude oil prices have jumped as the Ukrainian crisis continues.
Follow Invezz on Telegram, Twitter, and Google News for instant updates >
The USD/CAD price tilted higher on Monday morning as investors watched the Freedom Convoy and the ongoing trends in crude oil. The pair is trading at 1.2738, which is about 80 basis points above the lowest level last week.
One of the biggest stories in the past few weeks has been on the so-called Freedom Convoy in Canada. Thousands of truck drivers have protested in Ottawa and other cities, where they stopped movements.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
The protests also closed key border points leading to major challenges in Canada and the US. Companies like Ford, General Motors, and Honda all announced plans to slow production.
There are signs that the Freedom Convoy is now dissolving as the Canadian police started arresting some participants and towing vehicles. According to the Windsor police chief, about 30 participants have been arrested.
The reopening will be a good thing for the Canadian and US economies as business activities are set to normalise.
The other catalyst driving the USD/CAD price is the risk-off sentiment as investors watch the developments in Europe. In a statement on Friday, the US said that Russia had gathered the military personnel and equipment that it needs to carry out an attack. Therefore, in times of high risks, investors tend to rush to the safety of the US dollar.
Meanwhile, the pair is also reacting to the soaring crude oil prices. Brent, the international benchmark, has risen to $95 while the West Texas Intermediate (WTI) has risen to above $94. Crude oil prices are important because of the vast amount of oil that Canada produces and exports.
The four-hour chart shows that the USD/CAD pair has bounced back in the past few days. The pair found a strong support at 1.2650, where it struggled to move below last week. It is now approaching the important resistance shown in red.
The pair has also moved slightly below the 38.2% Fibonacci retracement level. It has also risen above the 25-day and 50-day moving averages while the MACD has moved above the neutral level.
Therefore, there is a likelihood that the pair will keep rising as bulls target the key resistance level at 1.2800. This view will be invalidated if the price moves slightly below 1.2700.