- A combination of factors helps the USD CAD reverse an initial slide to the 1.2625-20 region.
- The optimistic US economic outlook and the rally in US bond yields continue to prop up the USD.
- A modest decline in oil prices weighs on the CAD and continues to support the rally in the pair.
The pair USD / CAD has managed to recover more than 50 pips from the lows and has managed to climb to new daily highs around the 1.2680 region at the start of the European session on Monday.
The pair has captured some shopping near the region of 1.2625-20 and has halted its sharp retracement from the 1.2740 resistance zone, which was tested in reaction to the impressive monthly US NFP jobs report on Friday. The intraday rebound is due exclusively to the emergence of new purchases around the US dollar.
The USD has remained firm near its three-month highs and has seen supported by prospects for a faster US economic recovery. In addition, a new rise in US Treasury yields has further benefited the USD and has offered some support to the USD / CAD pair on the first day of a new week.
The US bond market has reacted to the passage of a huge US tax spending bill. On Saturday, the United States Senate voted 50-49 in favor of the $ 1.9 trillion pandemic aid package by US President Joe Biden and pushed the benchmark 10-year bond yield close to 1.60% to a one-year high.
In the meantime, oil prices have returned some of the strong initial gains and weighed on the loonie, currency pegged to commodity prices, which has offered some additional support to the USD / CAD pair. It is worth reporting that WTI jumped to the highest level since October 2018 amid news of attacks on Saudi Arabia’s oil industry on Sunday.
There is no major economic data release on Monday, either from the US or Canada. This, in turn, leaves the USD / CAD pair at the mercy of USD and oil price dynamics. That being said, it will be wise to wait for a few continuation purchases before positioning yourself to aim for significant gains.
USD / CAD technical levels
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