USD/CAD Weakens as Oil Strengthens, Boosting CADUSD/CADOANDA:USDCADNouzTraderUSD/CAD moved in a range-bound consolidation throughout Thursday's Asian session, consolidating recent weakness near a four-week low. ✅ Monetary Side: US Deflation Package (CPI & PPI) Destroys Dollar's Appeal The main factor pushing the US Dollar Index (DXY) near its lowest level since June 18th was the release of a series of worsening US inflation indicators: - US PPI Falls -0.3%: The US Bureau of Labor Statistics reported that the Producer Price Index (PPI) fell 0.3% (MoM) in June, a sharp reversal from the previous period's 0.6% increase. - A Series of Deflation Data: This weak PPI data follows a -0.4% fall in the General CPI on Tuesday. This combination of upstream and downstream deflation forced bond market participants to drastically cut speculation about Kevin Warsh's monetary tightening, locking USD buyers into an absolute defensive position. ------------------------------------------------------------------------------------------------------ ✅ Commodity Factor: Canadian Dollar Supported by Record Oil Prices & Maritime Warfare Despite the Bank of Canada's (BoC) dovish/cautious outlook due to the domestic economic slowdown, the Canadian Dollar (CAD) exchange rate has been spared the decline thanks to its status as a commodity currency (petrocurrency): - Oil Holds Strong at One-Month High: Global crude oil prices (WTI/Brent) held near one-month highs due to the threat of a real supply disruption in the Middle East. - Energy Inflation Dilemma: High oil prices due to the IRGC's blockade of the Strait of Hormuz have created concerns about secondary inflation. This has prevented traders from placing new, overly aggressive bearish bets on USD/CAD, thus limiting further declines. ------------------------------------------------------------------------------------------------------ ✅ Technical Analysis (Intraday) Technically, on the 4-hour (H4) chart, USD/CAD is in a downward consolidation phase near the lower boundary of the monthly corridor: - Critical Level 1.4000: The 1.4000 round number acts as the last line of defense for USD/CAD buyers. A clear break below this level will confirm a technical breakdown (valid breakdown) and trigger a wave of selling towards the 1.3950 area. - Short-Term Bias Remains Negative: As long as USD/CAD fails to reclaim and close above 1.4080, any daily upward recovery (relief rally) is projected to continue to encounter selling supply (fading rally).