- USD / CAD falls into negative territory for the fifth day in a row on Monday.
- Bullish oil prices support the CAD and sparked some selling around the pair.
- A modest pickup in USD demand extends some support and limits the pair’s slide.
The pair USD / CAD remains under pressure during the European session on Monday, staying a few pips above the lowest level since February 2018, reached earlier this Monday near 1.2440.
The pair has not been able to capitalize on its initial rise and has encountered new sales near the key psychological level of 1.2500, turning negative for the fifth day in a row. The momentum has dragged the USD / CAD pair to lows of more than three years and has been due to a bullish sentiment around crude oil prices, which tend to prop up demand for the Canadian dollar, a currency linked to oil prices. raw Materials.
Oil prices have risen little by little on the first day of a new trading week and have remained backed by the extension of supply cuts by the main oil producers. Additional support for crude has come from prospects for a strong recovery in global fuel demand and news that major oil exporter Saudi Arabia has cut April crude supplies to at least four Asian buyers by as much as four. 15%.
The negative factor has dragged the USD / CAD pair to lows of more than three years, around the 1.2440 regionAlthough a modest pickup in demand for the US dollar has helped limit any further losses. Investors remain optimistic that a massive US stimulus package will lead to a relatively faster US economic recovery from the pandemic, which in turn has been seen as a key factor that continues to prop up the USD.
Meanwhile, a pullback in US Treasury yields has prevented USD bulls from opening new positions and could limit the USD / CAD rally. Expectations that the Fed will act to curb any further increases in the cost of long-term borrowing have provided respite for bond traders. That said, inflation fears should keep US bond yields high ahead of this week’s FOMC policy meeting.
Market participants are now awaiting the US economic calendar, which features the only Empire State Manufacturing Index release at the start of the US session. This, along with US bond yields, will influence the USD. Apart from this, the dynamics of the oil price could contribute in generating some short-term trading opportunities around the USD / CAD pair.
USD / CAD technical levels
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
