Canadian Dollar rebounds on fresh Crude Oil strength

• The Canadian Dollar caught a much-needed rebound on Tuesday.
• Loonie markets are on the rise as the CAD catches fresh support from rising Crude Oil prices.
• Despite a near-term Loonie surge, the economic backdrop remains sticky.

The Canadian Dollar (CAD) found a fresh foothold on Tuesday, climbing around one-half of one percent against the US Dollar (USD). Crude Oil prices are on the rise in the front half of the week, providing some much-needed support for the otherwise underperforming Loonie.

There is little meaningful fundamental support for the Canadian Dollar on the offering; Canadian inflation metrics are still on the wrong side of the Bank of Canada's (BoC) 2% annual inflation target following Monday's Consumer Price Index (CPI) inflation print. Rate markets see less than a 10% chance of a BoC rate cut at the Canadian central bank's next meeting. Canadian employment figures continue to hit somewhere between middling and disappointing, and Retail Sales data, due on Friday, is expected to dip back into contraction territory.

Daily digest market movers: Canadian Dollar catches tailwind from rising Crude Oil

• The Canadian Dollar found a three-week high against the Greenback on Tuesday, pushing back from seven-month lows.
• The Loonie is back into the green against the US Dollar for November, bucking two months of straight losses.
• Canadian fundamentals remain relatively unchanged from one release to the next, with the majority of datapoints pointing toward a creeping downturn.
• Despite flubbing data releases, odds of further interest rate cuts from the BoC remain functionally nonexistent as inflation continues to run above the band.
• Crude Oil prices found further support on Tuesday, with West Texas Intermediate (WTI) barrel bids climbing 1.4% on the day. Oil barrel prices remain the singular technical support for the Loonie after climbing for a fourth straight trading session.

Canadian Dollar price forecast

USD/CAD is retreating from the early November spike near 1.4140 as the Canadian Dollar reclaims lost ground against the US Dollar. The pair slipped back toward the mid-range and is now hovering just above 1.3980, close to the fifty day exponential moving average at 1.3967. The 200-day Exponential Moving Average (EMA) at 1.3909 remains intact below current price action.

The latest downswing pulled price into a familiar pocket that has acted as a pivot through October and November. Buyers responded on the dip, but follow-through has been limited. The candle action shows hesitation, with repeated tests of the 1.4000 handle failing to hold. Momentum on the 14-period Relative Strength Index (RSI) has cooled and sits in the mid-forties, matching the choppy tone.

If pressure continues, traders will watch the 1.3950 to 1.3900 zone for potential reaction. On the upside, clearing 1.4050 would be the first sign that buyers are regaining confidence.

USD/CAD daily chart