- A strong intraday rally in oil prices sustained the Canadian dollar and put some pressure on the USD / CAD.
- The optimistic US economic outlook continued to provide some support to the dollar and helped limit losses.
- A sustained move beyond the 1.2625-30 region will set the stage for strong short-term gains for the pair.
The pair USD / CAD It fell more than 30-40 pips from the daily swing highs, although it has still managed to trade modest gains just below 1.2600.
The pair struggled to capitalize on its positive intraday move and began to slide down from the 1.2625-30 bid zone, or the two-week highs touched last Thursday. Oil prices rose more than 3% intraday following reports that Russia is in favor of renewing OPEC + oil production from April to May. This, in turn, provided a good boost to the commodity-linked Canadian dollar and triggered further selling around the USD / CAD pair.
On the other hand, the US dollar was seen to consolidate its recent strong gains to four-month highs amid a softer tone around US Treasury yields.This was seen as another contributing factor. With the intraday fall of the USD / CAD pair. That said, the slide remains muffled, at least for now, amid growing optimism about the United States’ economic recovery from the pandemic, which should continue to prop up the dollar.
Investors have bet on a relatively faster US economic recovery amid the impressive pace of coronavirus vaccination and the passage of a massive stimulus package. In fact, last Thursday, the president of the United States, Joe Biden, made an ambitious commitment to administer 200 million injections of vaccines in 100 days. Speculation about an additional US $ 3.0 trillion infrastructure plan further boosted expectations.
In the absence of major economic releases to move the market, be it from the US or Canada, it will be wise to wait for a solid follow-up to sales before positioning for a further decline. Conversely, a sustained move past the 1.2625-30 region will lay the foundation for further gains. The USD / CAD pair could then break above the 1.2700 level and aim to test the next big hurdle near the 1.2735-40 bid zone.
Technical levels
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