USDCAD has been trending lower, thanks to the recent rallies in oil prices.

Price has formed lower highs and lower lows, creating a descending channel pattern on its 4-hour chart. The pair just recently tested the resistance and appears ready to head back towards support.

In addition, the 100 SMA is safely below the longer-term 200 SMA, confirming that the path of least resistance is to the downside. This could take USDCAD down to the channel support near the 1.2800 major psychological level.

Stochastic is on the move down, confirming that sellers are taking control of price action. If buyers take over, however, a move past the channel resistance at the 1.3200 could take place and spur a reversal for the pair. 

The FOMC minutes revealed that two policymakers voted to hike interest rates but that majority of the committee members thought it would be prudent to wait for more data before tightening again. Policymakers highlighted the pickup in employment and in the housing sector but cited that the pickup in inflation might not be sustained. Fed officials also discussed the global economic slowdown but maintained that the US economy remains resilient. 

As for the Canadian dollar, the currency is taking its cue from the rise in crude oil thanks to falling stockpiles and easing fears about a supply glut. Some OPEC member nations are expressing increased willingness to cap production even if Iran does not cooperate.

The OPEC meeting is scheduled for April 17 and positive expectations for the outcome could continue to keep prices afloat. Also due next week is the BOC statement and another optimistic assessment could keep the Loonie supported.

By Kate Curtis from Trader’s Way