- A combination of divergent forces failed to provide a significant boost to USD/CAD.
- Bullish crude oil prices supported the loonie and acted as a headwind for the pair.
- As US bond yields rose, the risk aversion drive benefited the USD and extended support.
The pair USD / CAD extended its consolidating price sideways heading into the early American session and remained confined to a range around the psychological 1.2500 level.
Rising geopolitical tensions in the Middle East pushed crude oil prices to a more than seven-year high, underpinning the commodity-linked Canadian dollar and acting as a headwind for the USD/CAD pair. The decline, however, remains muted amid broad-based US dollar strength, fueled by a continued rise in US Treasury yields.
Indeed, the benchmark 10-year US government bond yield spiked to the highest level since January 2020 amid growing acceptance of a possible Fed liftoff in March. Additionally, US 2-year yields, which are highly sensitive to rate hike expectations, broke above the 1.0% level for the first time since February 2020 and benefited the dollar.
Meanwhile, a prolonged sell-off in US bond markets tempered investors’ appetite for perceived riskier assets and sent equity markets down sharply. This was seen as another factor that boosted the dollar’s relative safe-haven status and helped limit any significant declines for the USD/CAD pair, at least for now.
Market participants are now eagerly awaiting the release of the US Empire State Manufacturing Index, which, along with US bond yields and broader market risk sentiment, will boost USD demand. . Apart from this, traders will take more into account the dynamics of the oil price to take advantage of some short-term opportunities around the USD/CAD pair.
From a technical perspective, the pair’s inability to gain significant traction suggests that the recent sharp pullback from the 2021 high may still be far from over. That said, the repeated failures to find acceptance below the 1.2500 level warrants some caution before positioning for any further downside moves in the short term.
Technical levels
.

Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.