- USD/CAD fails to capitalize on a modest higher gapped open on Monday.
- A rally in crude oil prices benefits the CAD and acts as a headwind for the pair.
- A combination of factors continues to benefit the USD and offer support for the pair.
The pair USD/CAD closes the modest bullish gap opening on Monday and pull back towards the 1.3400 level during the early stages of the European session.
Crude oil prices move higher and recover some of Friday’s slide to more than a month lows, which in turn benefits the commodity-priced CAD and acts as a headwind for the USD/CAD pair. However, the fall is supported by the strong follow-up in buying interest around the US dollar.
Indeed, the DXY Dollar Index, which measures the dollar’s performance against a basket of currencies, extends Friday’s strong recovery from a nine-month low and continues to receive support from a combination of factors. Upbeat US jobs data could allow the Fed to maintain its hawkish stance and continue raising rates.
Expectations push US Treasury yields higher, which, coupled with the risk-off environment, it benefits the safe-haven USD. This, in turn, suggests that the path of least resistance for USD/CAD is to the upside and any significant decline is likely to be bought.
No major US economic data will be released on Monday, leaving the dollar at the mercy of US bond yields and broader market risk sentiment. On the other hand, traders will be guided by oil price dynamics to take advantage of some short-term opportunities around the USD/CAD pair.
USD/CAD technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
