- The prevailing bearish sentiment around USD triggers further selling around USD / CAD on Monday.
- Lowering expectations of a Fed rate hike and falling US bond yields continue to weigh on the USD.
- The technical setup favors the bears and supports the prospects for an extension of the slide.
The USD has seen some selling during the European session on Monday and has dragged the USD / CAD pair below the key psychological level of 1.2500. At time of writing, the pair rebounds slightly and remains negative on the day. after falling to the 1.2470 region, at levels not seen since March 19.
The pair has failed to capitalize on its initial rally and has encountered new selling near the 1.2525-30 area, moving lower for the second day in a row on Monday. This marks the fourth day of negative movement in the previous five and it is due exclusively to the prevailing bearish sentiment around the US dollar.
Despite strong economic data from the United States, investors appear to be convinced that the Fed will keep interest rates near zero for a longer period. This has been evident by the recent drop in the benchmark 10-year US government bond yield, which has fallen further from the highs of more than a year hit in March and plunged to 1.5280% last week.
In the meantime, renewed fears about another dangerous wave of coronavirus infections globally have affected global risk sentiment, although it has not provided any respite to the safe-haven US dollar. Even a moderate action around crude oil prices, which tend to influence the Canadian dollar, has not done much to support the USD / CAD pair either.
From a technical perspective, weakness below the round 1.2500 level adds credibility to last week’s bearish breakout short-term trading range and supports prospects for further decline. Therefore, a further decline towards the 1.2400 level, en route to multi-year lows near the 1.2365 region, seems like a clear possibility.
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.
