- USD/CAD hits some selling on Tuesday and breaks a three-day winning streak.
- The recovery in oil prices benefits the CAD and acts as a headwind for the pair amid a weaker USD.
- Recession fears and hawkish expectations around the Fed limit losses for the USD and the pair.
The pair USD/CAD comes under some selling pressure on Tuesday, breaking a three-day winning streak at two-week highs around the 1.3475 area touched the day before. The pair maintains its selling tone during the first half of the European session and is currently near the daily low, just above the 1.3400 level.
The Crude oil prices extend the previous day’s good rebound from a low of almost two months and gain traction for the second day in a row in the middle of the optimism about a recovery in fuel demand. This, in turn, benefits the commodity price-linked CAD, which, coupled with modest US dollar weakness, puts downward pressure on the USD/CAD pair. That being said, a combination of factors is helping to limit the pair’s losses, at least for now.
The concern about financial hardship stemming from the worst COVID-19 outbreak to date in China and the rapidly rising borrowing costs could continue to act as a headwind for black gold. Apart from this, the new speculation that the Federal Reserve will maintain its hawkish stance they should lend some support to the safe haven dollar. This, in turn, supports the prospects for some buying at lower levels around the USD/CAD pair.
Traders could also refrain from entering aggressive positions ahead of the Fed Chairman’s speeches, Jerome Powelland the Governor of the Bank of Canada, Tiff Macklen, scheduled for later in the American session. Investors will look for further indications of the future path of rate hikes, which in turn could determine the near-term path of the USD/CAD pair.
Technical levels to watch
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.
