USDCAD may rally to 1.40 amid declining oil prices

The USDCAD currency pair has been trading within a channel since May 8th, with support at 1.39000 and resistance at 1.40000. As of May 16th (time of writing), the price is positioned midway between this channel and a broader 1.38300–1.40800 range. Daily candlesticks show no clear directional bias. USDCAD's low volatility reflects trader uncertainty and anticipation of strong new catalysts to drive the market in a specific direction.

The daily Moving Average Convergence Divergence (МACD) indicator remains below the zero line but shows significantly weakening selling momentum as it approaches the baseline. Meanwhile, the 4-hour MACD continues to hold in positive territory, maintaining moderate buying momentum.

The daily Relative Strength Index (RSI) stands at 59, signaling potential strengthening of the upward trend. Meanwhile, the 4-hour RSI reads 49 and remains neutral, showing no clear directional bias—reflecting USDCAD’s sustained flat.

Canada is the largest exporter of oil to the United States. Declining crude prices typically weigh on the Canadian dollar's value. On Thursday, May 15, oil prices fell over 2% amid investor concerns about potential market oversupply. These fears stem from a possible US-Iran agreement and an unexpected build in US crude inventories reported last week.

According to the International Energy Agency, global supply growth is expected to significantly outpace demand growth. Oil inventories are projected to increase by an average of 720,000 barrels per day (bpd) this year and 930,000 bpd next year.

Trading strategy option: Buy at current price with Take Profit at 1.40000 and Stop Loss at 1.38800