Oil, Natural Gas, USD/CAD Technical Analysis Following Ukraine Conflict Escalation

Over the weekend, Russia launched significant air strikes targeting Ukraine’s power grid. Meanwhile, the US approved Ukraine’s use of long-range missiles on Russian territory, signaling further escalation. This week, the G20 meeting in Rio de Janeiro places the Ukraine conflict at the top of its agenda. A peace deal or truce could further dampen crude oil prices if sanctions on Russian oil are eased. WTI crude oil (CL) currently trades around $69 and exhibits volatility.

Moreover, the US dollar index (DXY) has pulled back from the resistance at 107. This correction has led to a decline in USD/CAD from its four-year high. The earlier strength in the US dollar was driven by hawkish commentary from Federal Reserve officials. Fed Chair Jerome Powell emphasized the resilience of the US economy, dismissing the need for imminent rate cuts. Other Fed officials echoed a cautious approach to monetary easing. Moreover, the persistent inflation and a tight labor market bolster the dollar’s appeal. This strength impacted the currency pairs, especially those linked to commodity-driven economies like Canada.

The Canadian Dollar (CAD) trades under mixed pressures. The expectations of accelerated rate cuts by the Bank of Canada (BoC) weigh the CAD. Inflation trends and economic struggles could prompt the BoC to act more aggressively, contrasting the Fed’s stance. The Canadian CPI report is set to be released on Tuesday and will shape the shape market sentiment. USD/CAD’s movement will reflect this interplay, with oil prices and central bank policies playing crucial roles. The ongoing geopolitical situation in Ukraine may create uncertainties in the energy market, likely impacting natural gas (NG) prices.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Rebound from Support

The daily chart for WTI crude oil shows significant price fluctuations. The price rebounds from the support area of $66.58, as highlighted by the red circle. The $67 to $77 range fluctuations reflect uncertainty driven by geopolitical tensions in the Middle East and the Russia-Ukraine conflict. The trend remains bearish, with the price below 50 and 200 SMAs.

Oil 4-Hour Chart – Bearish Trend

The 4-hour chart also lacks clear price direction, with consolidation within wide ranges. The strong rebound in oil prices yesterday was driven by the escalating conflict between Ukraine and Russia following the US approval for the use of long-range missiles. However, prices remain uncertain in the short term and wait for the next directional move. A break below $66 would initiate a downward trend, while a break above $72 would signal a positive outlook for oil prices.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Pivotal Area

The daily chart for natural gas prices shows that the price is consolidating at a pivotal area. Triangle resistance defines this pivotal zone, where a break above $2.80 could trigger a rally toward $3. The emergence of a double bottom supports a bullish outlook. The price opened with a gap on Monday, similar to last week, and appears poised to move higher. Strong support lies at the 50 SMA, around $2.44.

Natural Gas 4-Hour Chart –Consolidation Before Breakout

The 4-hour chart for natural gas also shows the price at a pivotal area. This area aligns with the breakout target of the descending channel, where a break above $2.80 could trigger the next upward move. The strong price gains since last week indicate heightened volatility.

USDCAD Technical Analysis

USDCAD Daily – Ascending Channel

The daily chart for USD/CAD shows bullish momentum within the ascending channel. On US dollar strength, the price broke the two-year resistance line around $1.387. The pair is poised to move toward the $1.422 area. Canada’s CPI data on Tuesday will further influence the USD/CAD pair. Since the pair has broken the two-year resistance line, this level has become a support area in the event of a significant correction.

USDCAD 4-Hour Chart – Double Bottom

The 4-hour chart for USD/CAD also shows bullish momentum in the pair. Forming an inverted head-and-shoulders pattern and a double bottom drives this momentum. The neckline of the double bottom pattern defines immediate support at $1.3950.