Why Is USDCAD Dropping Near 1.3500? | Oil Recovery & Dollar Weakness Explained

The ethereum price prediction dailyUSDCAD exchange rate has shown notable downward movement during Thursday's Asian trading session, hovering near the psychologically significant 1.3500 level. This pullback interrupts the pair's bullish momentum that began earlier this month, with market participants closely monitoring shifting dynamics between the US dollar and commodity-linked Canadian currency.

Several interconnected factors contribute to this price action. The Canadian dollar finds support from rebounding crude oil benchmarks, with West Texas Intermediate (WTI) maintaining position above $72 per barrel despite minor retreats. This energy sector strength stems from OPEC's optimistic demand projections in their latest monthly report, forecasting sustained consumption growth through 2025.

Meanwhile, the US dollar faces headwinds as Treasury yields soften across the curve. The DXY dollar index retreats from recent highs, currently testing support near 103.30 as bond markets adjust positions. This occurs despite stronger-than-expected US retail sales figures for December, which initially provided dollar support before yield considerations took precedence.

Canadian economic indicators present a mixed picture. While industrial and raw material price indices show continued contraction - potentially signaling manufacturing sector challenges - traders appear more focused on energy market developments that directly impact Canada's export-driven economy. The upcoming Canadian retail sales report scheduled for Friday could provide fresh directional catalysts.

Technical analysts note the 1.3500 level represents both psychological support and a convergence point for several moving averages. A sustained break below this handle could open the door for further downside toward the 1.3450 area, where the pair found support in early January. Conversely, renewed dollar strength or oil price weakness might see bulls attempt to reclaim the 1.3550 resistance zone.

Market participants continue weighing competing fundamental forces: robust US consumption data against softer yields, Canadian economic soft spots versus commodity tailwinds. This creates an environment where short-term positioning flows may dominate until clearer macro trends emerge from upcoming data releases on both sides of the border.