- USD / CAD rose for the third consecutive session on Tuesday.
- Moderate USD demand limited gains amid a modest oil rally.
The pair USD / CAD it maintained its modest intraday gains above the key psychological level of 1.2500 during the first half of the European session, although it lacked any subsequent buying.
The pair built on its recent bounce from the 1.2425-20 support zone and rose for the third consecutive session on Tuesday, although a combination of factors limited any significant gains. The US dollar remained depressed amid dovish Fed expectations and was further pressured by the disappointing US ISM manufacturing PMI on Monday.
Investors now appear to be convinced that the Fed will wait a longer period before slowing down its massive monetary support. Apart from this, the risk impulse in the markets was seen as another factor that undermined the safe haven dollar. That said, a solid rally in US Treasury yields helped limit any deeper losses for the dollar.
Meanwhile, a modest rally in crude oil prices sustained the Canadian dollar pegged to commodities and also acted as a headwind for the USD / CAD pair. Expectations of a continued decline in US oil inventories helped black gold regain some of the previous day’s heavy losses triggered by concerns about the fast-spreading Delta variant of the coronavirus.
There is no major market-moving economic data released on Tuesday, be it from the US or Canada. Therefore, broader market risk sentiment and US bond yields will influence the USD. Apart from this, traders could follow the signs of oil price dynamics for some short-term opportunities around the USD / CAD pair.
Technical levels
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