- A combination of supporting factors helps the USD / CAD gain positive traction on Wednesday.
- An extension of the positive movement in US bond yields offers some support for the USD.
- A softer tone around oil prices weighs on the CAD and continues to support the rally.
The pair USD / CAD maintains its modest gains above the 1.2600 level during the European session on Wednesday, although it lacks any follow-up buying.
The pair I have found some support near the very important 200-day SMA and has gained positive traction during the first half of Wednesday’s trading action, breaking a three-day losing streak in a row. The USD / CAD pair, for now, appears to have halted its recent sharp pullback from the yearly highs and has been supported by a combination of factors.
The US dollar has moved away from the one-week lows touched in the previous day amid a certain rebound in US Treasury yields. In fact, the 10-year US government bond yield has once again approached the 1.30% level amid expectations that the Fed could still begin to reverse its pandemic-era stimulus in 2021.
Secondly, a softer tone around crude prices has weighed on the CAD, a currency pegged to commodity prices, and has offered some additional support to the USD / CAD pair. That said, concerns about the fast-spreading Delta variant abated after China said it had stopped the community spread of COVID-19.
Investors also seem reluctant to open aggressive positions, preferring to wait on the sidelines before Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium. This has been seen as another factor that has limited any rally for the USD / CAD pair, justifying some caution before positioning for any further bullish movement.
Market participants are now waiting for the US economic calendar, which highlights the publication of durable goods orders at the start of today’s American session. This, along with US bond yields, could influence the dollar. Investors will take more indications of oil price dynamics to seize some short-term opportunities around the USD / CAD pair.
USD / CAD technical levels
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