- USD/CAD extends its price consolidation sideways move around the 100-day SMA on Monday.
- A modest rebound in oil prices benefits the Loonie and caps the pair amid subdued USD demand.
- Looming recession risks and issues with the US debt ceiling help limit the dollar’s slide.
The pair USD/CAD It is fighting for firm intraday direction on Monday and trading in a tight range around the 100-day SMA early in the American session. The pair is currently hovering around the key psychological 1.3500 level, almost unchanged for the day, and remains within a familiar trading range that has held for the past week or so.
A modest intraday rebound in crude oil prices underpins the commodity-linked Loonie and turns out to be a key factor acting as a headwind for the USD/CAD pair amid US Dollar (USD) price action. moderate. The surprise break in negotiations on the US debt ceiling, together with less aggressive comments from Federal Reserve (Fed) Chairman Jerome Powell, caused a further drop in US Treasury yields. US and weighed on the USD.
It should be recalled that Powell, at a Fed news conference on Friday, said it was not yet clear whether interest rates will have to rise further amid uncertainty about the impact of past hikes and the recent tightening of bank credit. . On the other hand, the president of the Minneapolis Fed, Neel Kashkari, has made his opinion known on Monday, stating that the decision to raise the interest rate once more in June or to pause it is very close.
Apart from this, optimism about a possible improvement in US-China relations acts as a headwind for the safe-haven dollar. However, the dollar’s decline remains subdued, at least for now, on concerns about slowing global growth, especially in China. In turn, this is expected to affect fuel demand, limit the rise in crude oil prices and help limit any significant decline in the USD/CAD pair.
In the absence of relevant US economic data, attention will remain focused on a key meeting between President Joe Biden and Republican House Speaker Kevin McCarthy to discuss the debt ceiling. Additionally, US bond yields, along with broader risk sentiment, will weigh on the dollar. Traders will follow the movement of Oil prices to take advantage of short-term opportunities around the USD/CAD pair.
technical levels
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.
