USD/CAD recovers initial lost ground and returns to 1.3000 amid sharp drop in oil

- Advertisement -
  • USD/CAD reverses an intraday decline and is supported by a combination of factors.
  • A sharp pullback in oil prices undermines the loonie and acts as a tailwind.
  • A modest bounce in the dollar from the daily low contributes to the intraday rise.
  • The pullback in US bond yields and the risk-on mood could weigh on the dollar and the pair.

The USD/CAD pair rebounds a few pips from the daily low and breaks back above the key psychological 1.3000 level ahead of the Wall Street open.

Oil prices pull back sharply from one-month highs reached earlier on Tuesday, amid concerns that a deeper global economic slowdown will hit fuel demand. In addition, hopes that Iranian oil exports, which have been sanctioned, will resume overshadow expectations that major oil producers may cut output and weigh on the black liquid. This, in turn, undermines the commodity-linked loonie and helps the USD/CAD pair attract some downside buying near the 1.2970 region.

- Advertisement -

Elsewhere, the US dollar trims some of its modest intraday losses and further contributes to the USD/CAD pair’s intraday rebound. The growing acceptance that the Fed will continue to tighten policy at a faster pace turns out to be a key factor acting as a tailwind for the dollar. That said, a further decline in US Treasury yields, coupled with boosting risk appetite, could cap any significant rise in the safe haven dollar and limit the pair’s upside.

This, in turn, makes it prudent to wait for some follow-up buying beyond the daily high, around the 1.3025 area, before positioning for any significant intraday appreciation moves. Market participants now await the US economic docket, with JOLTS job openings and the Conference Board consumer confidence index. The data could influence the demand for dollars, which, together with the dynamics of the price of oil, should produce opportunities in the short term around the USD/CAD pair.

- Advertisement -

Technical levels

USD/CAD

Panorama
Last Price Today 1,302
Today’s Daily Change 0.0009
Today’s Daily Change % 0.07
Today’s Daily Opening 1.3011
Trends
20 Daily SMA 1.2907
50 Daily SMA 1.2917
100 Daily SMA 1.2846
200 Daily SMA 1.2768
levels
Previous Daily High 1.3076
Previous Daily Minimum 1.2991
Previous Maximum Weekly 1.3063
Previous Weekly Minimum 1.2895
Monthly Prior Maximum 1.3224
Previous Monthly Minimum 1.2789
Daily Fibonacci 38.2% 1.3023
Daily Fibonacci 61.8% 1.3043
Daily Pivot Point S1 1.2976
Daily Pivot Point S2 1.2941
Daily Pivot Point S3 1.2891
Daily Pivot Point R1 1.3061
Daily Pivot Point R2 1.3111
Daily Pivot Point R3 1.3146

Source: Fx Street

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Hot Topics

Related Articles