Oil, Natural Gas, USD/CAD Technical Analysis: US Fed’s Third Rate Cut Sparks Volatility

The Federal Reserve reduced interest rates to the range of 4.25% to 4.50%, which aligned with expectations. Oil prices fell due to expectations of fewer interest rate cuts next year, strengthening the US dollar. WTI crude oil (CL) slipped toward $69.50, while Brent oil (BCO) dropped below $73. The US dollar, at its highest level in two years, has made oil and other commodities more expensive for global buyers.

The latest U.S. crude oil inventories report shows a decline of 0.934 million barrels, smaller than the forecasted drop of 1.600 million barrels and the previous week’s decline of 1.425 million. Despite the U.S. crude oil inventory data, oil prices dropped due to mixed signals, including weak Chinese demand, rising non-OPEC+ production, and a stronger US dollar. Oil prices have fluctuated within tight ranges for the past two months and await a clear direction.

On the other hand, USD/CAD surged after the Federal Reserve rate cuts of 25 basis points. The pair reached fresh highs above 1.4440 as traders reacted to the Fed’s cautious approach, solid economic growth projections, and a gradual decline in inflation expectations. A stronger dollar and lower oil prices often weaken the Canadian dollar, given Canada’s reliance on crude exports. With oil prices under pressure and the Fed’s hawkish tone boosting the dollar, the USD/CAD pair may remain elevated in the near time, reflecting diverging economic drivers.

WTI Crude Oil (CL) Technical Analysis

Oil Daily Chart – Consolidation at Apex of Triangle

The daily chart for WTI crude oil shows that prices dropped following the Federal Reserve’s policy decision, driven by a stronger US dollar. Wednesday’s daily candle was bearish, forming within the apex of a triangle pattern near the resistance level of $71.40. Oil prices failed to break above $71.40, forming a bearish hammer at this resistance. The price shows a neutral trend within the triangle, awaiting a clear direction for the next move.

Oil 4-Hour Chart – Consolidation

The 4-hour chart shows how oil prices fluctuate below the red-dotted trend line at the $71.40 resistance level. Prices rebound higher when they reach the support at the black dotted trend line. These fluctuations create price uncertainty due to the lack of clear direction. A breakout above $71.40 and $72.50 is required to establish further directional movement.

Natural Gas (NG) Technical Analysis

Natural Gas Daily Chart – Bullish Momentum

The daily chart for natural gas (NG) shows bullish momentum following a breakout from the cup and handle pattern. Strong resistance lies in the $3.50 to $3.60 zone, and a break above this level could trigger significant upward momentum. The positive consolidation between $3 and $3.60 suggests the price is preparing for the next upward move. Increased heating demand due to cold weather forecasts may support higher natural gas prices in the coming months.

Natural Gas 4-Hour Chart –Positive Development

The 4-hour chart shows that natural gas prices remain within an ascending channel and are building positive momentum around the channel’s midline. The price rebound from the midline has formed a bullish price action, with resistance at $3.50 and $3.60. A break above $3.60 could trigger a strong rally in natural gas prices.

USD/CAD Technical Analysis

USD/CAD Daily – Bullish Trend

The daily chart for USD/CAD shows that the pair broke out of a long-term bullish ascending channel before the Fed’s rate decision. The stronger dollar following the Fed rate cuts has further fueled this bullish momentum. The formation of a double bottom and the breakout of the pivotal resistance at $1.3870 suggests the pair is likely to remain upward. The breakout above the ascending channel at $1.4250 further confirms the bullish momentum. However, the pair is approaching overbought levels, signalling a potential price correction toward $1.4250.

USD/CAD 4-Hour Chart – Ascending Channel

The 4-hour chart for USD/CAD shows that the pair has reached the resistance level of the ascending channel following the Fed rate cuts. The emergence of bullish patterns such as an inverted head and shoulders, a double bottom, and a cup and handle indicates strong bullish momentum in USD/CAD. As the pair approaches the overbought region, a slight correction may occur, potentially supporting renewed positive action.