- A combination of factors helps the USD / CAD gain positive traction for the third day in a row.
- The decline in oil prices weighs on the CAD and offers support to the pair amid a modest strength in the USD.
- The bulls could refrain from opening aggressive positions ahead of US data and the BoC’s moentary policy decision.
The pair USD / CAD has broken the 1.2400 barrier during Wednesday’s European session and has soared near two-week highs in the past hour. At time of writing, the pair is trading around the 1.2425 region, up 0.30% on the day.
After a brief consolidation during the first half of trading action on Wednesday, the USD / CAD has captured new buying and built on its recent recovery from below the 1.2300 level, at four-month lows. This marks the third consecutive day of a positive move, also the fourth in the previous five, and is due to a combination of factors.
Crude prices have moved lower and has reversed the previous day’s gains near multi-year highs. This, in turn, has weighed on the CAD, a currency pegged to commodity prices, and acted as a tailwind for the USD / CAD pair. Apart from this, the latest phase of the sudden rebound in the last hour could be further attributed to the appearance of some purchases around the US dollar.
The upbeat US macro data on Tuesday turned out to be a key factor that extended some support to the USD amid expectations of an early tightening of monetary policy by the Fed. That said, risk appetite sentiment, along with a further decline in Treasury yields from the United States, it could limit the gains of the safe-haven USD and the USD / CAD pair.
Investors could also refrain from opening aggressive positions and prefer to wait on the sidelines ahead of the Bank of Canada meeting this Wednesday. The Canadian central bank will announce its monetary policy decision at the beginning of the American session and it could instill some volatility around the USD / CAD pair.
Meanwhile, the publication of durable goods orders stands out on the US economic calendar. Aside from this, US bond yields and broader market risk sentiment could influence USD demand. Investors will take more indications of oil price dynamics to seize some significant opportunities around the USD / CAD pair.
USD / CAD technical levels
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