The USDCAD moved higher earlier in the session supported by the story that OPEC+ was mulling a 500K barrel per day production increase (see earlier post here). That pushed the price to the low of a defined swing area between 1.3494 and 1.3510, helped by the tumble in oil which saw the price test the end of December close at $75.35 (low reached $75.27 just below that level). Sellers in the USDCAD leaned against the lower end of the swing area and stalled the rally.
After the Saudi’s denied the rumour saying that the the current agreement is place until the end of 2023, the price of oil rallied and the USDCAD rotated back toward the broken 38.2% of the move down from the November high at 1.34476.The price is back trading at 1.3453. A move below the 38.2% with momentum, would have traders looking back toward 1.34078 swing area (see red numbered circles on the chart above).
The buyers made a play on headline news but also retreated on headline news. Oil may have just bottomed for the rest of the year. It makes sense technically at least with the run higher in 2022, fully retracing before settling into 2023. For the USDCAD, it is still comfortably above it’s close for the year (at 1.2636).