- A combination of factors triggers new selling around USD / CAD on Monday.
- The outcome of the US elections and pessimistic expectations from the Fed continue to weigh on the USD.
- A strong rebound in oil prices benefits the CAD and contributes to the pair’s selling bias.
The pair USD / CAD remains under pressure during Monday’s European session, with bears expecting a sustained break below the 1.3000 key psychological level.
Following the directionless price movements of the previous day, the pair has met new sales the first day of a new trading week and has come under pressure from a combination of factors. The victory of Democratic candidate Joe Biden in the presidential elections in the United States has removed some of the uncertainties and has continued to support the optimistic sentiment prevailing in the market.
Meanwhile, The possibility of a divided Congress has fueled speculation that the Fed could be forced to further ease its monetary policy to combat the economic consequences of the continued increase in COVID-19 infections. Risk appetite money flows, coupled with pessimistic expectations from the Fed, have kept US dollar bulls on the defensive, which in turn has been considered a key factor that puts some pressure on the USD / CAD pair.
Meanwhile, a good intraday recovery in crude oil prices has benefited the loonie, currency linked to the prices of raw materials. This, coupled with a softer tone around the USD, has further contributed to the selling tone around the USD / CAD pair. But nevertheless, the lack of a strong continuation of the selling warrants some caution before positioning for any further bearish movement.
With that said, sustained weakness below the 1.3000 psychological level will be seen as a new trigger for bears and will make the USD / CAD pair vulnerable to prolong its recent move lower. In the absence of major economic releases, the pair remains at the mercy of USD and oil price dynamics and general market risk sentiment.
Credits: Forex Street
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