- USD / CAD regains positive traction on Tuesday amid a modest strength in the US dollar.
- Optimistic expectations from the Fed and a rebound in US bond yields prop up the USD.
- Positive oil prices could benefit the CAD and limit the pair’s gains before the US CPI.
The pair USD / CAD moves with a positive bias during the first half of the European session on Tuesday, staying close to the daily highs around the 1.2480 region.
Following the sharp pullback the day before from above the 1.2500 psychological level, the USD / CAD pair has managed to regain positive traction on Tuesday. amid modest US dollar strength. Expectations that the Fed is moving towards tightening its monetary policy stance earlier than expected has continued to act as a tailwind for the USD and has offered some support to the pair.
It is worth remembering that the minutes of the June FOMC meeting released last Wednesday revealed that Fed officials agreed on the need to be ready to act if inflation or other risks materialize. Therefore, the focus will remain on the release of the latest US consumer inflation figures, which may offer clues as to the likely timing of reduced bond purchases and interest rate hikes.
Apart of this, a rebound in US Treasury yields it has been seen as another factor that has supported the USD. Having said that, a positive tone around crude oil prices could prop up the CAD, currency tied to commodity prices, and limit any strong gains for the USD / CAD pair. This ensures some caution for the bulls and before positioning for any further upside.
Aside from Tuesday’s US CPI report, Fed Chairman Jerome Powell’s semi-annual testimony in Congress on Wednesday and Thursday influences market expectations about the Fed’s monetary policy outlook. This, along with the latest update policy statement from the Bank of Canada on Wednesday, will play a key role in determining the next directional move for the USD / CAD pair.
USD / CAD technical levels
.
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.
