- USD / CAD remains trapped within a tight range on the last trading day of the week.
- A weaker USD has not helped the pair capitalize on this week’s recovery attempt.
- A sharp pullback in oil prices weighs on the CAD and helps limit the decline.
The pair USD / CAD lacks a firm directional bias on Friday and ranges from tepid gains to minor losses around the key psychological level of 1.3000 during the European session.
A combination of divergent factors has failed to provide significant momentum or help the pair capitalize on this week’s recovery move from the 1.2895 region. A softer tone around the US dollar has been largely offset by a sharp decline in crude oil prices, which tend to weigh on the Canadian dollar, a currency tied to commodity prices. This, in turn, has led to moderate and range-bound price action on the last day of the week.
The optimism about a possible coronavirus vaccine it has continued to boost investor sentiment and weighed on the safe haven US dollar. Further, the revival of hopes for new fiscal stimulus measures in the US and a further decline in US Treasury yields has put some additional pressure on the USD. This has been seen as one of the key factors limiting the rise of the USD / CAD pair.
But nevertheless, the decline remains supported amid the emergence of some strong sales in the oil markets. In fact, WTI crude oil has fallen further from the highest level since March, falling more than 2% on Friday amid concerns about oversupply ahead of the OPEC + ministers meeting on Monday. The group plans to ease this year’s supply cuts and could possibly go ahead with its plan to increase production by 2 million barrels per day. as of January.
Meanwhile, the inability of the USD / CAD pair to gain continuation traction warrants some caution before positioning for any short-term bullish movement. That said, investors could still refrain from positioning themselves for any big move in either direction amid the absence of relevant economic releases on Friday, be it from the US or Canada.
USD / CAD technical levels
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