- Sustained selling bias around USD drags USD / CAD lower on the first day of the week.
- A modest rally in US bond yields offers some support for the USD.
- Falling oil prices weigh on the CAD and help limit deeper losses for the pair.
The pair USD / CAD moves lower during the European session on Monday, staying under pressure around the 1.2460-65 region, just above the one-month lows previously touched during the Asian session near 1.2450.
The pair has started the new week with a pessimistic tone and has extended the sharp post-BoC retracement drop from last week from just above the 1.2650 level, the highest since March 10. Today’s move marks the second consecutive day of negative movement, and also the third of the previous four, and is solely due to the prevailing bearish sentiment around the US dollar.
Investors seem convinced by the view that any spike in inflation is likely to be transitory and they have been lowering their expectations of a tightening of the Fed’s monetary policy ahead of schedule. This, coupled with the underlying bullish tone in financial markets, has weighed on the safe-haven US dollar and pushed it to fresh multi-week lows, putting some downward pressure on the USD / CAD pair.
That said, a combination of factors has helped limit any further losses, at least for now. A modest rally in US Treasury yields has offered some support to the USD. On the other hand, a new downward movement in crude oil prices has weighed on the loonie, a currency tied to commodity prices, and has prevented bears from opening aggressive positions around USD / CAD.
Market participants are now waiting with the US economic calendar, which features the release of durable goods orders data at the start of the American session today. Other than this, US bond yields and general market risk sentiment could influence the USD. Investors will also follow the signs of oil price dynamics to seize some short-term opportunities around the USD / CAD pair.
USD / CAD technical levels
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