USD/CAD stalls below 1.3600 due to rising oil prices

• USD/CAD stable despite strong US Dollar, buoyed by rising WTI oil prices supporting the Canadian Dollar.
• Hurricane Francine escalates oil prices; US producers evacuate Gulf Coast staff, reducing production.
• Growing speculation about a BoC rate cut due to increasing Canadian unemployment; upcoming US CPI data to influence Fed's decisions.

The USD/CAD was virtually unchanged during the North American session and traded at around 1.3560 as buyers failed to crack the strong resistance seen at the 200-day moving average (DMA) at 1.3588.

USD/CAD trades near 1.3560, as higher oil prices limit the pair’s upside

Market sentiment remains upbeat as Wall Street registers gains, while a strong US Dollar failed to push the USD/CAD toward the 1.3600 figure, mainly due to higher oil prices.

West Texas Intermediate (WTI), the US crude oil benchmark, has risen on fears that hurricane Francine is about to hit the Louisiana coast. According to Reuters, “Oil and gas producers along the Gulf Coast started evacuating staff and curbing drilling to prepare for Tropical Storm Francine.”

The Canadian Dollar has weakened since the Bank of Canada (BoC) was the first major central bank to slash rates amid fears of an economic slowdown. Last week, Canada’s unemployment rate climbed to 6.6%, the highest in seven years, excluding the two years of the COVID-19 pandemic.

BoC Governor Tiff Macklem will cross wires on Tuesday. Last week, he said a more significant rate cut is possible if the economy needs a boost.

On the US front, investors are eyeing the release of the Consumer Price Index (CPI) in August, which is expected to confirm that the Federal Reserve might begin to cut rates at the upcoming September 17-18 monetary policy meeting.

USD/CAD Price Forecast: Technical outlook

From a technical perspective, the major is set to continue the ongoing downtrend unless the USD/CAD climbs past the 200-DMA at 1.3588, which will expose the 1.3600 figure. Further upside will be seen once cleared, with the following key resistance zone being 1.3618, the highs of August 22 and 23, and the confluence of the 50 and 100-DMA at around 1.3667/75.

Conversely, on the path of least resistance, the USD/CAD first support would be 1.3550. A breach of the latter will expose 1.3500, followed by the September 6 through at 1.3465.