- USD/CAD is moving lower for the fourth day in a row and is being pressured by a combination of factors.
- Bullish oil prices underpin the CAD and act as a headwind for the pair amid a sustained selling bias around the USD.
- The focus of attention remains on the release of US consumer inflation figures.
The pair USD/CAD finds it difficult to build on its modest rally on Tuesday and attracts fresh selling near the psychological level of 1.3000. The pair moves lower for the fourth consecutive day and falls in the area of ​​1.2955 during the first half of the European session, hitting new two-week lows.
Crude oil prices recover lost ground in the early hours and remain stable near one-week highs amid concerns over global supply shortages, fueled by Russia’s threat to cut off oil flows to any country backing a price cap. This continues to support the CAD, a commodity-linked currency, acts as a headwind for the USD/CAD pair. On the other hand, the US dollar remains under pressure near the monthly low and turns out to be another factor putting downward pressure on the pair.
Given the markets already seem to have priced in a 75 basis point Fed rate hike at the September meeting prevailing risk appetite weighs on the safe-haven US dollar. In addition, signs of a sustained decline in US inflation have caused US Treasury yields to decline modestly and contribute to the sell-off around the USD. That said, traders might refrain from opening aggressive positions pending US consumer inflation numbers.
The US CPI report, due out early in the American session, will play a key role in influencing the Fed’s monetary policy outlook and will dictate the short-term path of the dollar. In addition, traders will look to OPEC’s monthly report which will affect oil price dynamics and produce short-term opportunities around the USD/CAD pair.
USD/CAD technical levels
Source: Fx Street
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