Recently, oil prices significantly increased, boosting the US Dollar. This matters because countries that don’t export much oil deal with higher prices and slower economic growth. Due to this tricky situation, the US economy stands out as one of the largest oil exporters.
Oil skyrocketed because OPEC+ leaders decided to cut oil supplies until the end of 2023. Brent crude oil costs around $90 per barrel, and WTI crude is close to $86 per barrel, which we haven’t seen since last November.
Many experts believe rising oil prices highlight the risk of stagflation worldwide, making the US Dollar stronger than G10 countries’ currencies.
The US Dollar index is at its highest point since March 2023. At the same time, the Pound to Dollar exchange rate fell below 1.25, and the Euro to Dollar exchange rate almost reached 1.07.
Another factor pushing the US dollar higher is the relative economic strength of the US, especially in contrast to the ongoing softness in Europe and China.
If rising oil prices boost inflation again, the Federal Reserve will have no choice but to raise the key rate, supporting the greenback.
XBRUSD technical analysis
Recently, XBRUSD broke above the significant resistance range of 87.00 – 88.50, currently the major price’s support. Traders may look for buy opportunities on the retest of this area. The major target for XBRUSD remains at 97.50.
USDCAD technical analysis
USDCAD has one of the most exciting trading setups among USD currency pairs. The price has formed a global bullish wedge, and an upcoming breakout is only a matter of time.
While Intraday traders may try to catch some short-term bounces off the resistance trendline. The overall sentiment is highly bullish. Therefore, opening buy trades after a breakout would be the best option. Middle-term targets for USDCAD are 1.3850 and 1.3980.
