Crude Oil, USDCAD Outlook: Markets Hold Key Levels Amid Trade Negotiations

Key Events

• OPEC+: Disputes over quota compliance raise the chance of a supply cut rollback in June
• Geopolitical Risks: US-China trade talks, the US-Russia-Ukraine conflict, and the Iran nuclear deal remain unresolved
• Market Sentiment: Both oil and FX markets are trading sideways, waiting for a clear catalyst to trigger the next move

Global markets are treading carefully, caught between unresolved Trump-era tariffs, falling oil prices, and a softer US Dollar. These overlapping pressures are shaping investor sentiment and guiding capital flow across both commodities and currencies.

Crude oil, in particular, is navigating a fragile recovery. After dipping to the $55 zone earlier this month — pricing in oversupply fears — WTI has managed a cautious rebound toward the $64 mark. But with trade deals still in limbo and demand recovery uncertain, the move remains hesitant. At the same time, OPEC+ faces growing pressure to unwind its supply cuts to defend market share, even if that means sacrificing short-term price stability for longer-term positioning.

In FX markets, the Dollar is holding above the key 98 level on the DXY index, but without a clear macro driver, its direction is far from certain. USD/CAD reflects this indecision — pulled between oil’s influence on the Canadian Dollar and the Dollar’s broader weakness.

The pair is holding ground, but it’s clear the market is waiting. A fresh catalyst — whether from trade breakthroughs, geopolitical shifts, or economic data — may be what’s needed to push both oil and USD/CAD into their next phase. Until then, they remain range-bound, with volatility just beneath the surface.

What are the key levels to watch?

USDCAD Outlook: 3-Day Time Frame – Log Scale

Source: Tradingivew

In line with the DXY’s rebound from the 98-support level, USD/CAD is also recovering from the 1.38 zone, which aligns with the 0.618 Fibonacci retracement of the uptrend extending from September 2024 to January 2025. If the pair fails to hold above 1.3770, the downtrend could extend toward new 2025 lows, with potential support levels seen at 1.3647 and 1.34. However, with the RSI rebounding from oversold territory — levels last seen in 2021 — reversal risks are rising.

A sustained move above 1.3930 may open the door for further gains, targeting 1.3990, 1.4070, 1.4160, and 1.4250, which aligns with the 0.618 Fibonacci retracement of the downtrend from the March 2025 high at 1.4540 to the April 2025 low at 1.3780.

Crude Oil Outlook: Weekly Time Frame – Log Scale

Source: Tradingview

Between speculation over OPEC+ unwinding supply cuts, uncertainty surrounding trade deals and tariffs, and shifting expectations around sanctions on Iran and Russia, oil continues to hold its positive rebound, in line with broader market sentiment. Prices are currently testing the $64.70 resistance zone.

A confirmed weekly close above $64.70 may pave the way for further upside, with potential targets at $66, $67.40, $70.40, and $74.50 — aligning with the upper boundary of the long-term descending channel extending from the 2022 highs.

On the downside, a break below the $60 level could bring $58 and $55 back into play as support. A decisive close below $55 would increase the likelihood of a deeper correction toward $49, aligning with the lower boundary of the long-term uptrend channel originating from the historic lows of the 1800s, as illustrated on the chart below.

Crude Oil Outlook: 3-Month Time Frame – Log Scale

Source: Tradingview

Written by Razan Hilal, CMT

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