- USD/CAD reversed an early decline to a one-week low amid the appearance of some dollar buying.
- Rising oil prices could support the loonie and cap currency gains.
- Markets reacted little to the release of positive US Durable Goods Orders data for May.
The pair USD/CAD attracted some buying on dips near 1.2865-1.2860 and bounced around 40 pips from a 1 1/2 week low hit on Monday. The pair was last seen making modest intraday gains around 1.2900 heading into the North American session.
The US dollar reversed an intraday decline to a one-week low amid a nice rally in US Treasury yields, bolstered by risk-on markets. The appearance of some dollar buying at lower levels turned out to be a key factor that offered some support to the USD/CAD pair. However, the rally in oil prices has supported the commodity-linked loonie and could prevent the pair from rising significantly, at least for now.
Measures against Russian oil and gas exports that could emerge from a meeting of the Group of Seven (G7) leaders in Germany acted as a tailwind for the black liquid. However, prospects of a revival of the Iran nuclear deal, which could lead to increased Iranian oil exports, could limit the commodity’s gains. Additionally, traders may be reluctant to make aggressive bets and prefer to stay on the sidelines ahead of this week’s OPEC+ meeting.
Aside from this, investors will take note of Fed Chairman Jerome Powell’s remarks at a press conference on Thursday that could help determine the short-term path of the USD/CAD pair. Meanwhile, markets reacted little to US macro data, which showed durable goods orders unexpectedly rising 0.7% in May. Orders excluding transportation items also beat estimates and rose 0.7%, although they failed to boost the USD/CAD pair.
However, spot prices, for now, appear to have halted the recent pullback from the yearly high around the 1.3075-1.3080 region touched earlier this month, and have recouped some of Friday’s losses. Some follow-on buying has the potential to lift the USD/CAD pair towards the 1.2945 resistance zone, above which the bulls could aim to reclaim the key psychological 1.3000 level.
Technical levels
Source: Fx Street
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