USD/CAD: Commodity-linked CAD underpinned by rising oil

The USD/CAD is trading down 0.2% at around C$1.2664 on Wednesday morning in Europe, breaking the key support level of C$1.2720.

Commodity-linked currencies such as the Canadian and Australian dollar were underpinned by this week’s rally in oil prices. The oil price rose to the highest level in two years boosted by news of an explosion on a Libyan crude pipeline as well as voluntary OPEC-led supply cuts.

Technical outlook

The sideways trend on USD/CAD has been invalidated by the exchange rate breaking on the downside. Strong technical support of  C$1.2720 represented 38.2% Fibonacci retracement of long-term appreciation of Loonie towards C$1.2097 cyclical low and C$1.2920 represented by the peak of the same move.
 
Once the USD/CAD closed below a key support level of C$1.2720, next target for the currency pair is at C$1.2470 represented by 28.2% Fibonacci retracement and supported by technical oscillators like Slow Stochastics, Momentum and MACD all pointing downwards.  
 
USD/CAD daily chart