- USD/CAD quickly reverses an intraday slide to one-week lows.
- Falling crude oil prices weaken the Loonie and act as a tailwind.
- In an aggressive line, the Fed’s expectations limit the fall of the USD and provide support.
The pair USD/CAD It recovers a few points from the 1-week low hit during the early hours of the North American session and currently stands around the 1.3350-1.3355 zone, up less than 0.10% on the day.
A modest drop in US Treasury Yields, coupled with an intraday turnaround in equity markets, triggered some selling around the safe-haven USD and put pressure on the USD/CAD pair. That being said, a combination of factors helps limit any further losses and helps the pair attract some buyers near the 1.3325 area.
Crude oil prices once again fail near a technically significant 200 SMA and kick off the new week on a weaker note. This, in turn, weakens the commodity-linked Loonie. Apart from this, the prospect of further monetary policy tightening by the Fed acts as a tailwind for the dollar and helps limit losses for the USD/CAD pair.
Investors seem convinced that the US central bank will maintain its hawkish stance, with bets fueled by the risk of higher US inflation in January. Therefore, attention will remain focused on the crucial US CPI report, due out on Tuesday, which will influence the Fed’s rate hike path and boost short-term USD demand.
Pending these key data, US bond yields and broader risk sentiment will play a key role in influencing the dollar, in the absence of relevant economic data to move markets. Other than this, traders will follow the oil price dynamics to take advantage of short-term opportunities around the USD/CAD pair.
Technical levels to watch
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
