- USD/CAD gains some positive traction on Monday and breaks a four-day losing streak.
- The Fed’s aggressive outlook benefits the USD and supports the pair’s move higher.
- Bullish crude oil prices benefit the CAD and could cap any significant gains in the pair.
The pair USD/CAD moves higher during the first half of the European session on Monday, holding close to daily highs around the 1.2615 region.
The pair attracted some buying near the monthly low on Monday, although the rally attempt lacked bullish conviction and has been limited by a combination of factors. Crude oil prices rise more than 4% on the first day of the new week and benefit the CAD, a currency linked to the prices of raw materials. This, coupled with the subdued action around the US dollar, caps the USD/CAD pair, at least for now.
Oil prices built on last week’s nice rebound from the monthly low and gained strong traction amid news that the European Union will consider whether to impose an oil embargo on Russia. In addition, attacks by the Iran-aligned Houthi group in Yemen caused a temporary drop in production at a joint venture of the Saudi Aramco refinery in Yanbu, providing a further boost to the price of black gold.
On the other hand, the US dollar has struggled to gain any significant traction, which in turn failed to impress the pair’s bulls or provide any significant lift to USD/CAD. Having said that, the aggressive outlook of the Fed, which indicated that it could raise rates in the remaining six meetings in 2022, helped limit any fall in the USD and offered some support to the pair.
However, the USD/CAD, for now, seems to have broken four consecutive days of losing streak and remains at the mercy of the new developments around the war between Russia and Ukraine. Aside from this, investors will take further cues from Fed Chairman Jerome Powell’s scheduled speech later in the American session, which coupled with dollar and oil price dynamics, should provide some lift to the pair. .
USD/CAD technical levels
Source: Fx Street
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