- A combination of factors triggers new selling around USD / CAD on Tuesday.
- The pullback in US bond yields and risk appetite sentiment affect the safe-haven USD.
- A rebound in crude oil prices benefits the CAD and contributes to the pair’s selling bias.
The pair USD / CAD has extended its steady intraday decline and has fallen near the 1.2600 region, at three-day lows, during the European session on Tuesday.
Following two-way price movements the day before, the pair came under renewed selling pressure on Tuesday, affected by a combination of factors. The US dollar has seen some profit taking from three-and-a-half-month highs amid a modest pullback in US Treasury yields Other than this, a positive tone around crude oil prices has benefited the loonie, a currency linked to commodity prices, and has put some additional pressure on the USD / CAD pair.
Investors also seem inclined to lighten its bullish USD positions in anticipation of some Fed action to curb the increase in the cost of long-term loans. Apart of this, risk appetite sentiment has further affected the safe haven US dollar. That said, the optimistic US economic outlook, driven by the approval of the long-awaited $ 1.9 trillion pandemic aid package, they should help limit any significant losses in the USD, at least for now.
On the other hand, The loonie has benefited from a new boost in crude oil prices. Prospects for a tighter supply due to the extension of OPEC + production restrictions and hopes of strong global demand Fuels have helped WTI prices to hold steady near the multi-month highs set on Monday. That said, the lack of a solid continuation sell around USD / CAD warrants some caution before positioning for any further bearish moves.
In the absence of major economic releases from either the US or Canada, US bond yields and overall market risk sentiment will influence the USD. This, coupled with the oil price dynamics, could generate some significant trading opportunities around the USD / CAD pair.
USD / CAD technical levels
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