- The USD / CAD captured new offers during the beginning of the American session amid a modest rebound in the USD.
- The nervousness of COVID-19 took its toll on risk sentiment and helped offset disappointing macroeconomic data from the US.
- Concerns about slowing demand for fuel undercut the loonie and continued to support the rally.
The pair USD / CAD it reversed an initial drop in the early hours of the US session towards 1.2500 and rallied to the upper end of its daily trading range. The pair was last seen hovering around the 1.2585 region, up 0.3% on the day.
The US dollar struggled to preserve its intraday gains amid a sharp drop in US Treasury yields. This, coupled with the disappointing release of US durable goods order data, undermined the USD and put some pressure on the USD / CAD pair.
That said, the risk aversion momentum in the markets acted as a tailwind for the safe-haven dollar and helped the USD / CAD regain positive traction. Global risk sentiment remained fragile amid concerns about the Delta variant of the coronavirus.
Investors now appear concerned that the ongoing spread of COVID-19 could derail the global economic recovery. This, in turn, weighed on global risk sentiment and also fueled concerns about a slowdown in global fuel demand, which weighed on crude prices.
This was seen as a key factor affecting demand for the commodity-linked Canadian dollar and continued to support the tone of supply surrounding the USD / CAD pair. However, it remains to be seen if the bulls can capitalize on the move and regain the 1.2600 mark.
So it will be wise to wait for some solid follow-up buying before positioning yourself for any further appreciation moves.
Technical levels
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