- The USD / CAD is witnessing some selling for the third day in a row on Tuesday.
- The pullback in US bond yields and risk appetite affects the safe-haven USD.
- Rising oil prices support the CAD and put some additional pressure on the pair.
The pair USD / CAD remains under pressure at the start of the European session on Tuesday, trading at two-week lows in the region of 1.2730-25.
The pair has extended the losses of the previous day and has seen some selling for the third day in a row. The drop is due to the appearance of some sales around the US dollar and the current upward movement in crude oil prices, which tend to underpin demand for the Canadian dollar, a currency linked to commodity prices.
The latest US jobs report, released last Friday, raised questions about a US economic recovery. relatively faster than the coronavirus pandemic. This, along with a turnaround in US Treasury yields., has led to some profit taking around the US dollar from the more than two-month highs hit on Monday.
Investors have been weighing the prospects for massive US tax spending amid developments to accelerate US President Joe Biden’s $ 1.9 trillion stimulus package. Added to this, progress on coronavirus vaccines pushed US bond yields to the highest level in a year.
The combination of factors has fueled optimism about a strong global economic recovery and a rebound in fuel demand. Aside from this, additional supply cuts by major exporter Saudi Arabia have pushed oil prices to the highest level in 13 months, around the region of $ 58.30 on Tuesday.
The extension of the strong rally in oil prices has further contributed to the selling tone around the USD / CAD pair. That said, the pair has so far managed to stay above the 1.2700 level, which in turn justifies some caution for bears amid the absence of any relevant US economic data releases.
USD / CAD technical levels
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