- A combination of factors put pressure on the USD / CAD for the second consecutive session.
- The post-FOMC USD sell bias did not diminish due to disappointing macroeconomic data from the US.
- A modest rebound in oil prices sustained the loonie and added to the tone offered.
The pair USD / CAD it maintained its strongly offered tone during the early days of the American session and was last seen hovering around the 1.2475-80 region, a few pips above the two-week lows.
The pair extended the previous day’s rejection drop from the very important 200-day SMA and witnessed some follow-up selling for the second consecutive session on Thursday. The USD / CAD pair has now confirmed a bearish break below the 1.2525-20 support, marking the lower end of a week-long trading range and was pressured by a combination of factors.
The US dollar remains weighed down by Fed Chairman Jerome Powell’s dovish turn on Wednesday, emphasizing that they were far from making substantial progress in employment. Powell was also cautious about the reduction, saying lawmakers discussed some details, but that it will take a few more meetings to address it, which, in turn, weighed on the dollar.
Apart from this, a generally positive mood in equity markets and disappointing macroeconomic releases from the US put additional downward pressure on the safe-haven dollar. The first estimate showed that the US economy expanded at an annualized rate of 6.5% during the April-June period, widely disappointing the consensus estimates that point to growth of 8.5%.
Added to this, initial weekly US jobless claims fell less than anticipated to 400,000 during the week ending July 23 compared to the prior week’s upwardly revised reading of 424,000. The data reaffirmed speculation that the Fed will maintain its ultra-looser policy stance for a longer period and did nothing to provide respite for USD bulls.
On the other hand, a slightly positive tone around crude oil prices sustained the Canadian dollar pegged to commodities. This was seen as another factor that contributed to the continued decline of the USD / CAD pair to the lowest level since July 14. A subsequent drop below the mid-1.2400 will lay the groundwork for an extension of the depreciation move towards the 1.2400 round mark. .
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.
