- A combination of factors exerts a continuation of the selling around USD / CAD on Tuesday.
- American political uncertainty keeps USD bulls on the defensive and puts some pressure on the pair.
- A rebound in oil prices benefits the CAD and adds to the pair’s intraday selling bias.
The USD sell bias has accelerated at the start of the European session on Tuesday and has dragged the USD / CAD pair below the 1.3150 level, at a minimum of one week. At the time of writing, the pair is trading at the daily lows zone, around 1.3140, and with downward pressure intact.
Following a brief consolidation during the first half of trading action on Tuesday, the pair has encountered new selling and extended the previous day’s heavy losses of over 150 pips. The uncertainty of the political situation in the US has led investors to undo your bullish positions on the US dollar, which in turn has been considered a key factor putting pressure on the USD / CAD pair.
Despite the fact that opinion polls have been indicating a strong lead for Democratic candidate Joe Biden over incumbent President Donald Trump, investors have refrained from predicting the actual outcome of Tuesday’s US presidential election. Apart of this, the prevailing optimistic sentiment in the market has further affected the safe haven US dollar.
On the other hand, a strong rebound in oil prices, now rising more than 2% on the day, has benefited the demand for the Canadian dollar, a currency linked to commodity prices, and has further contributed to the intraday decline in the pair. Oil prices have strengthened on Tuesday and have rebounded further from multi-month lows hit earlier this week. following news that Russian oil companies may agree to an extension of OPEC + production cuts.
Meanwhile, the latest downward movement in USD / CAD at the start of the European session could be attributed to some technical selling below the round 1.3200 level. So it remains to be seen whether the dip marks a short-term bearish breakout or attracts some buying at lower levels ahead of today’s key event.
Credits: Forex Street
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