- USD/CAD is down for the fifth day in a row and comes under pressure from fresh selling around the Dollar.
- Bearish crude oil prices could weigh on the CAD and help limit the pair’s losses.
- Also, traders are wary of the release of the US CPI on Tuesday and the FOMC on Wednesday.
The pair USD/CAD meets with fresh selling after an initial rally to the 1.3355-1.3360 region on Monday and turns down for the fifth day in a row, also marking the eighth day of negative movement in the previous nine. The pair continues the intraday decline during the first half of the European session and falls to the zone of 1.3320-1.3315 in the last hour, approaching the low of more than a month touched on Friday.
He positive tone around stock markets does not help the safe-haven US dollar (USD) to capitalize on Friday’s rebound from its lowest level since May 24 and attracts new sellers on the first day of a new week. Apart of this, last week’s surprise 25 basis point rate hike by the Bank of Canada (BoC) continues to support the Canadian Dollar (CAD) and puts some downward pressure on the USD/CAD pair. That being said, a combination of factors could hold traders back from taking further bearish positions around the pair, at least for now.
The uncertainty about the path of rate hikes by the Federal Reserve (Fed), coupled with a modest rebound in US Treasury yields, could act as a tailwind for the dollar. It is worth remembering that the recent dovish rhetoric of a series of influential Fed officials fueled speculation that the US central bank will not raise interest rates at the end of the two-day meeting on Wednesday. Markets, however, are still pricing in the possibility of another 25 basis point hike at the July FOMC meeting, on the expectation that the fight against stubbornly high inflation is not over yet.
Besides, Fears that the global economic slowdown will affect fuel demand continue to weigh on crude oil prices, which could weaken the CAD and provide some support for the USD/CAD pair. On the other hand, traders may prefer to stay on the sidelines awaiting the latest US consumer inflation figures due on Tuesday and the expected FOMC policy decision on Wednesday. This, in turn, will play a key role in driving demand for the USD and help traders determine the next directional move for the 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.
