- A combination of factors helps the USD / CAD regain positive traction on Tuesday.
- Nervousness around covid-19 weighs on investor sentiment and benefits the safe-haven USD.
- A softer tone around oil prices weighs on the CAD and provides a further boost to the pair.
The pair USD / CAD has captured some aggressive buying during the European session on Tuesday and has rocketed to new daily highs in the last hour, with the bulls now looking to conquer the 1.2600 level.
The last stage of the sudden rebound could be attributed to some aggressive buying around the US dollar, driven by some safe-haven flows amid a sharp decline in stock markets. Concerns that the fast-spreading Delta variant of COVID-19 could derail the global economic recovery has weighed on investor sentiment and benefited traditional safe-haven currencies.
Investors also seem concerned that the current spread of COVID-19 could slow down global demand for fuel. Apart from this, risk aversion in the markets has weighed on oil prices. In fact, WTI crude has fallen below $ 72.00 per barrel again, which has weighed on the CAD, a currency linked to commodity prices, which has been seen as another factor that has provided a boost. additional to the USD / CAD pair.
Having said that, a sharp drop in US Treasury yields has prevented USD bulls from opening aggressive positions and they have capped any further gains for the USD / CAD pair, at least for now. Therefore, it will be wise to wait for some strong continuation buying before confirming that the recent pullback from multi-month lows is over.
Market participants are now awaiting the US economic calendar, which highlights the publication of durable goods orders and the Conference Board’s consumer confidence index. This, along with broader market risk sentiment, will influence the USD. Investors will take more indications of oil price dynamics for some short-term opportunities around the USD / CAD pair.
USD / CAD technical levels
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