- USD/CAD gained positive traction for the third day in a row and soared to a 2-week high.
- Oil prices languished near multi-week lows and undermined the commodity-linked Canadian dollar.
- The Fed’s dovish outlook continued to act as a tailwind for the USD and remained encouraging.
The pair USD/CAD it maintained its offered tone during the early American session and was seen hovering around the upper end of its daily trading range, around the 1.2570 region.
The pair builds on the previous day’s breakout momentum through the psychological 1.2500 level and gained traction for the third day in a row on Thursday. With the latest leg up, the USD/CAD pair has now rallied over 150 pips from the year-to-date low around the 1.2400 mark touched on Tuesday. Crude oil prices languished near a three-week low hit on Wednesday, which, in turn, undermined the commodity-linked Canadian dollar and acted as a tailwind for the pair.
On the other hand, a softer tone around US Treasury bond yields capped the US dollar’s recent rally to a near two-year high and did little to provide additional lift to the USD/CAD pair. . That said, the Fed’s hawkish outlook favors USD bulls and supports the prospects for a further near-term appreciation move for the major. Therefore, a further move back to the test of last week’s high around the 1.2590-1.2595 region remains a distinct possibility.
On the economic data front, US weekly initial jobless claims fell to a more than five-decade low of 166,000 in mid-April. Adding to this, the previous week’s reading was also revised down to 171,000, pointing to a sharp rise and the lowest layoffs on record. This adds credence to the constructive short-term outlook and pushed the USD/CAD pair to a nearly two-week high. In the meantime, any significant pullback should now be viewed as a buying opportunity and remain capped.
Technical levels
Source: Fx Street
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