- A combination of factors helps the USD / CAD gain traction for the second day in a row.
- The decline in oil prices weighs on the CAD and supports the pair’s upward move amid modest USD strength.
- Investors await US retail sales and Fed Chairman Powell’s speech for fresh momentum.
The pair USD / CAD has extended its intraday earnings and has soared to nearly four-week highs, around the 1.2630 region, during the European session on Tuesday.
The pair has built on the positive movement of the previous day and has gained some continuation traction for the second day in a row on Tuesday. The momentum has carried the USD / CAD pair beyond the very important 200-day SMA and has been supported by a combination of factors.
Investors follow concerned that the fast-spreading Delta variant the coronavirus could derail the global economic recovery and affect fuel demand. This has been evident from the recent drop in crude oil prices, which in turn has weighed on the CAD, a currency linked to commodity prices.
Aside from the nervousness of COVID-19, political tension in Afghanistan it has affected global risk sentiment. This has been seen as a key factor that has fueled some safe haven money flows towards the US dollar and further contributed to the continued positive movement of the USD / CAD pair.
The rally could also be attributed to short coverage above a technically significant moving average. Subsequent force beyond the 1.2600 level may have already set the stage for a further short-term bullish move for the USD / CAD pair.
Market participants are now awaiting the release of monthly US retail sales figures. This will be followed by Fed Chairman Jerome Powell’s speech, which could influence the USD. Apart from this, the dynamics of the oil price will provide some commercial momentum to the USD / CAD pair.
USD / CAD technical levels
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