- USD / CAD remains trapped within a range for the second day in a row on Wednesday.
- Concerns about the increase in the number of COVID-19 cases in the US keep the USD bulls on the defensive.
- Rising crude oil prices support the CAD and help limit the rise in the pair.
The pair USD / CAD is extending its lateral consolidation move during the European session on Wednesday and remains trapped within a range below the 1.3050 level.
The pair has struggled to capitalize on this week’s rally, from nine-month lows around the 1.2930-25 region touched on Monday, and is being limited by a combination of factors. A promising development in COVID-19 vaccine trials has been offset by concerns about the continued rise in new cases in the United States.
In fact, several U.S. states have imposed restrictions stricter to stem the second wave of infections and have revived the Hopes for a substantial stimulus package from the Fed to support the economy. This, in turn, has kept the US dollar bulls on the defensive and has been seen as a key factor that has limited the attempt to recover the USD / CAD pair.
On the other hand, the latest optimism about a possible coronavirus vaccine has boosted expectations of a rapid recovery in global fuel demand. This, coupled with a larger-than-expected drop in US crude inventories, has pushed oil prices to new multi-month highs around $ 42.00 on Wednesday.
The current upward movement in oil prices has benefited the Canadian dollar, a currency linked to commodity prices, and has contributed even more to limit the rise of the USD / CAD pair. That said, the decline remains supported, at least for now, as investors appear reluctant to open bearish positions on a banking holiday in the United States and Canada.
Credits: Forex Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
