- USD/CAD saw some selling on Wednesday and reversed the positive move overnight.
- Risk momentum weighed on the safe haven USD and put some downward pressure.
- Falling oil prices undermined the Canadian dollar and helped limit losses amid the Ukraine crisis.
The pair USD/CAD recovered a few pips from the daily low and was last seen trading around the 1.2835-1.2840 region, shedding 0.30% for the day.
Having struggled to break above the 1.2900 round figure, the USD/CAD pair came under some selling pressure on Wednesday and reversed overnight gains to the highest level since Dec 23. A positive change in risk sentiment dragged the safe haven down. The US dollar pulled back from the 22-month high hit earlier this week and put some downward pressure on the pair.
Global stock markets staged a strong rally in reaction to news that Ukraine’s Foreign Minister Dmytro Kuleba and his Russian counterpart Sergey Lavrov agreed to meet on Thursday. This would be the first potential conversation between the two officials since Russian troops invaded Ukraine on February 24 and revived hopes for a diplomatic solution to end the war in Ukraine.
That said, the risk of further escalation of tensions between the Russian and Western powers should limit bullish market movement. Apart from this, rising US Treasury yields should act as a tailwind for the USD. Aside from this, falling crude prices could undermine the commodity-linked Canadian dollar and provide some support for the USD/CAD pair, at least for now.
However, the pair, for now, appears to have broken a four-day winning streak and remains at the mercy of the events surrounding the Russia-Ukraine saga. Meanwhile, the fundamental backdrop supports the prospects for further appreciation in the near term, although bulls are likely to wait for sustained strength beyond 1.2900 before placing further bets.
Technical levels
Source: Fx Street
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