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USD/CAD falls to a new daily low and approaches 1.2850 amid USD weakness

  • USD/CAD is selling off again on Monday amid modest dollar weakness.
  • The pullback in US bond yields and the risk boost are weighing on the safe-haven dollar.
  • Falling oil prices could undermine the loonie and help limit further losses.

The pair USD/CAD attracts fresh selling on the first day of a new week and pulls back further from a near three-week high around the 1.2985 area touched on Friday. The intraday drop extends to the middle of the European session and drags the pair to a new daily low, around the 1.2870 zone in the last hour.

The US dollar struggles to ride the strong post-NFP move higher and lower on Monday, which turns out to be a key factor putting downward pressure on the USD/CAD pair. The pullback in US Treasury yields, coupled with a generally positive tone around equity markets, tempers the dollar’s relative safe-haven status. However, the decline looks muted, which warrants some caution before placing aggressive bearish bets.

The positive monthly US jobs report released on Friday raised bets for a further Fed rate hike at the September policy meeting. This should act as a tailwind for US bond yields and help revive demand for dollars. Oil prices, meanwhile, languished near a multi-month low, which should undermine the commodity-linked loonie and help limit any significant decline in the USD/CAD pair, at least for now.

In the absence of major economic releases, US bond yields and general market risk sentiment will play a critical role in dollar demand. Aside from this, traders will follow the oil price dynamics to take advantage of short-term opportunities around the USD/CAD pair. However, the focus will be on the release of US consumer inflation figures on Wednesday, which could provide a further directional boost to the pair.

Technical levels

USD/CAD

Panorama
Last Price Today 1.2852
Today’s Daily Change -0.0085
Today’s Daily Change % -0.66
Today’s Daily Opening 1.2937
Trends
20 Daily SMA 1.2909
50 Daily SMA 1.2864
100 Daily SMA 1.2785
200 Daily SMA 1.2736
levels
Previous Daily High 1.2985
Previous Daily Minimum 1.2861
Previous Maximum Weekly 1.2985
Previous Weekly Minimum 1.2768
Monthly Prior Maximum 1.3224
Previous Monthly Minimum 1.2789
Daily Fibonacci 38.2% 1.2938
Daily Fibonacci 61.8% 1.2908
Daily Pivot Point S1 1,287
Daily Pivot Point S2 1.2803
Daily Pivot Point S3 1.2746
Daily Pivot Point R1 1.2994
Daily Pivot Point R2 1.3052
Daily Pivot Point R3 1.3119

Source: Fx Street

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