- USD / CAD captures some buying on Monday and climbs back above the 1.2600 level.
- A softer risk tone helps reactivate demand for the USD as a safe haven and supports the pair’s upward move.
- The drop in crude oil prices weighs on the CAD and provides an additional boost to the pair.
The pair USD / CAD moves higher at the start of the European session on Monday, holding on to your daily gains around the 1.2600 level.
A combination of factors has helped the pair regain positive traction on the first day of a new week and return to approaching two-week highs touched last Thursday. Against the background of the optimistic US economic outlook, a softer risk tone has helped reignite demand for the US dollar safe haven. Apart of this, a further drop in crude oil prices has weighed on the Canadian dollar, a currency pegged to commodity prices, and has provided an additional boost to the USD / CAD pair.
Investors have remained optimistic about the prospects for a relatively faster US economic recovery amid the impressive rate of vaccination for COVID-19 and the passage of a massive stimulus package. The President of the United States, Joe Biden, in his first formal press conference on Thursday, made the ambitious promise to deliver 200 million vaccine injections in its first 100 days. Added to this, investors have been speculating with another $ 3 trillion infrastructure plan.
Meanwhile, news from the Suez Canal that the beached container ship Ever Given has almost completely re-floated has sent crude oil prices down sharply. In fact, WTI futures down nearly 2.50% on the day, which has been seen as another factor that has propelled the USD / CAD pair higher during the first half of trading action on Monday. That being said, the lack of solid continuation buying warrants some caution before positioning for any further bullish movement.
Investors could now refrain from opening aggressive positions, preferring to wait on the sidelines before Friday’s release of the US monthly NFP jobs report. Meanwhile, broader market risk sentiment could weigh on the USD. This, coupled with the dynamics of the oil price, could generate some short-term trading opportunities around the USD / CAD pair.
USD / CAD technical levels
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