USD/CAD Breaks New High Amid Declining Oil Prices and Hawkish Fed Outlook
The USD/CAD pair continues its upward trend for the third consecutive day, reaching a new high since July 29 during Wednesday's early European session. This uptrend is fueled by the decline in crude oil prices, which have fallen to their lowest level in over two weeks due to hopes of a diplomatic resolution between the US and Iran, as well as the reopening of the Strait of Hormuz.
The Loonie, being a commodity-linked currency, is negatively affected by the decrease in oil prices. On the other hand, the US Dollar has reached a fresh high since July 30 following the Federal Reserve's hawkish outlook, which supports the USD/CAD pair's upward momentum.
From a technical perspective, the recent breakout above the 100-day Simple Moving Average at 1.3958 is seen as a key trigger for bullish traders. The advance beyond the 61.8% Fibonacci retracement at 1.4051 underpins a bullish near-term bias, validating the constructive outlook for the USD/CAD pair and supporting prospects for an extension of the well-established uptrend.
However, caution is advised as the Relative Strength Index (RSI) at 68.4 flirts with overbought conditions, hinting that the rally may be nearing a consolidation phase rather than an immediate reversal.