- A combination of factors triggers new selling around USD / CAD on Monday.
- Optimism over the COVID-19 vaccine leads to a modest rebound in oil and benefits CAD.
- Pessimistic expectations from the Fed weigh on the USD and put some additional downward pressure.
The pair USD / CAD moves with a negative bias during the European session on Monday, falling to new daily lows near the 1.3050 level. Still, the pair remains within the range of the previous day.
The pair has not been able to capitalize on Friday’s good bounce of around 60 pips and is has faced rejection near the 1.3100 level, pressed by a combination of factors. The last optimism about successful vaccine trials against the coronavirus has revived hopes for a recovery in fuel demand. Apart of this, expectations that OPEC + will keep production under control They have led to a modest rebound in crude prices. This, in turn, has benefited the Canadian dollar, a currency tied to commodity prices, and has been seen as one of the key factors putting some pressure on the USD / CAD pair.
Meanwhile, market optimism has weighed the safe-haven US dollar, which was already being affected by speculations of further monetary easing by the Fed. Investors appear to have started to weigh the possibility of such action as early as the December meeting amid concerns about the economic consequences of the imposition of new restrictions due to COVID-19 in several US states. , the key focus will be on publishing Minutes from last FOMC meeting, to be released Wednesday, and that could play a key role in boosting short-term sentiment around the USD.
Meanwhile, investors could follow the signs of Monday’s release of the Preview of US Manufacturing and Service PMIs. Apart from this, the broader market risk sentiment will influence the price of the USD and could generate some significant trading opportunities around the USD / CAD pair.
From a technical perspective, some continuation weakness below the horizontal support at 1.3040-35 will be seen as a new trigger for the bears and will accelerate the slide towards the key psychological level of 1.3000. The USD / CAD pair could eventually drop to test the support of the monthly lows near the 1.2930-25 area.
USD / CAD technical levels
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