- USD / CAD witnessed moderate / in-range price action on the first day of a new week.
- The decline in crude oil prices undermined the loonie and extended some support to the pair.
- The nervousness of COVID-19, falling US bond yields weighed on the dollar and limited the rise.
The pair USD / CAD it extended its sideways price consolidation moves throughout the mid-European session and remained confined to a tight trading range, just above 1.2550.
A combination of divergent forces failed to provide any momentum to the USD / CAD pair, instead leading to moderate / range-limited price action on the first day of a new trading week. A modest decline in crude oil prices undercut the commodity-linked loonie and offered some support. That said, a weaker US dollar limited the principal’s strong gains.
Investors remain concerned that the spread of the highly contagious Delta variant of the coronavirus could slow global demand for fuel. Aside from this, reports of a Chinese crackdown on crude importers largely offset recent optimism led by expectations of tight supplies and sparked some new sales around black gold.
Meanwhile, the ongoing spread of COVID-19 in the US fueled fears about further restrictions on business and social life, which, in turn, weighed on the USD. Aside from this, a sharp intraday drop in US Treasury yields, triggered by the risk aversion momentum in the markets, was seen as another factor undermining the dollar.
In the absence of major economic releases to move the market, be it from the US or Canada, investors also seemed reluctant to make aggressive bets ahead of the FOMC meeting, which begins Tuesday. The result will play a key role in influencing short-term USD price dynamics and will provide new directional momentum to the USD / CAD pair.
Technical levels
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