- A combination of factors causes some selling around USD / CAD on Monday.
- Risk appetite continues to weigh on the safe-haven USD and puts downward pressure on the pair.
- The rebound in crude oil prices benefits the CAD and contributes to the pair’s selling tone.
The pair USD / CAD remains under pressure during the European session on Monday, staying around the 1.2660 region, just above multi-week lows.
The pair has moved lower on the first day of a new week and has extended Friday’s drop to around 85-90 pips from the area of 1.2765. The drop is due to a combination of factors, although it has lacked a strong track and the USD / CAD pair, so far, has managed to stay above multi-week lows around the 1.2660 region.
The progress on coronavirus vaccines and hopes for a fiscal stimulus plan Massive US stocks have fueled optimism about a strong global economic recovery. This, in turn, has continued to support underlying bullish sentiment in financial markets, as shown by the continuation of a rally in equity markets, and has hurt the safe haven US dollar.
USD bulls have failed to get any respite and have ignored the continued rise in U.S. Treasury yields In fact, firm expectations of the passage of the 1.9 trillion COVID-19 stimulus package of dollars proposed by US President Joe Biden pushed the benchmark 10-year bond yield above 1.20% for the first time since February 2020.
On the other hand, a strong rebound in crude oil prices has benefited the loonie, a currency linked to commodity prices, and has put some pressure on the USD / CAD pair. Oil prices remain underpinned by hopes that easing the lockdown restrictions will boost global demand for fuel and has received an additional boost from mounting fears of increased tension in the Middle East.
There is no major economic data release on Monday from either the US or Canada. Therefore, broader market risk sentiment will play a key role in influencing the USD. This, along with the oil price dynamics, will also be considered to seize some short-term trading opportunities around the USD / CAD pair.
USD / CAD technical levels
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