- USD / CAD finds new selling at higher levels amid the prevailing sell bias around USD.
- The higher odds of an election win for Joe Biden keep the USD bulls on the defensive.
- Weaker crude oil prices weigh on the CAD and help limit losses before the FOMC.
The pair USD / CAD has fallen around 75 pips from daily highs at 1.3178, falling towards the 1.3100 region at the start of the European session. At the time of writing, the pair seeks to stabilize around the 1.3120 region.
The pair has struggled to capitalize on its initial rally and has encountered new selling near the 1.3175-80 zone amid the prevailing selling bias surrounding the US dollar. While investors await the outcome of the US presidential election, The advantage of Democratic candidate Joe Biden over current Donald Trump has been seen as a key factor weighing on the USD.
However, the end result depends on the vote count of a few remaining swing states. Further, Trump has already filed lawsuits and a new tally in key battlefield states, which has added to the uncertainty and has diminished the prospects for large stimulus packages to help the economy affected by COVID-19. This has led to a further decline in US Treasury yields and has contributed to the sale of the USD.
Meanwhile, the fall seems to be supported by a further downward movement in crude oil prices, which tend to weigh on the demand for the Canadian dollar, a currency linked to commodity prices. Concerns that new lockdown measures to curb the second wave of coronavirus could weaken demand for fuel They continue to put some pressure on oil, which is now down more than 1.5% on the day.
Aside from the above factors, investors may also be reluctant to position aggressively ahead of the latest FOMC monetary policy update, to be released during today’s US session. This, along with Friday’s monthly jobs report from the US and Canada, will play a key role in determining the next directional move for the USD / CAD pair.
USD / CAD technical levels
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Credits: Forex Street
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