- US dollar turns negative as risk sentiment improves.
- The CAD is the best performer among the commodity currencies.
- USD/CAD is headed for the lowest close since April 20.
The USD/CAD is falling on Tuesday and recently hit a new daily low at 1.2539. The weakness of the US dollar caused the pair to continue lower during the American session.
Does the descent resume?
A sudden improvement in risk sentiment buoyed US stock indices, which turned positive within minutes. The Dow Jones rose 0.21% after rallying 300 points. At the same time, US yields extended the decline. The US 10-year yield fell to 2.96%, far from the recent high of 3.06%.
The combination of falling US yields and risk appetite weighed on the dollar. DXY has erased all gains and at time of writing is trading at 102.35 (daily low), down 0.07%.
Canadian economic data showed an unexpected narrowing of the trade surplus in April as imports increased more than exports, with the Ivey PMI for May rising from 66.3 to 72.0.
USD/CAD maintains a bearish intraday bias and is looking for the June low at 1.2534. A break down could trigger further losses towards the 1.2500 area. Below, the next level is 1.2465, and a daily close below that would suggest more losses.
To the upside, 1.2575 is again a resistance level to watch out for, followed by the 1.2610/15 area. Below 1.2615, the pair will maintain a short-term bearish/neutral outlook. Above 1.2615, the dollar could rally further towards 1.2680.
Technical levels
Source: Fx Street
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