USD / CAD trapped within a range below the 1.2800 level

• USD / CAD is consolidating within a range below the 1.2800 level on Wednesday.
• Rising crude oil prices benefit the CAD and limit the pair’s rise.
• A rally in US bond yields benefits the USD and offers some support for the pair.

The pair USD / CAD lacks a firm directional bias and ranged from lukewarm gains to minor losses, below the 1.2800 level, during the European session on Wednesday.

A combination of divergent factors has failed to provide significant momentum to the pair and has led to moderate and limited price action within a range on Wednesday. The prevailing bullish sentiment around crude oil prices has continued to benefit the loonie, currency tied to commodity prices, which in turn has limited any significant rally for the USD / CAD pair.

In fact, Oil prices have extended the previous day’s strong gains of nearly 5% and have risen to the highest level in more than a year. Renewed optimism about a massive fiscal stimulus in the United States, along with positive news about the development of vaccines for COVID-19, has raised hopes for a recovery in fuel demand and pushed oil prices above the psychological level. from $ 55.00.

Apart from this, a decline in US stocks has provided additional momentum and has continued to support the current uptrend in crude oil prices. Having said that, Expectations of higher government borrowing have continued to boost US Treasury yields and support the US dollar., which could help limit any further losses for the USD / CAD pair.

The lack of a solid continuation sell now warrants some caution for the bears before positioning for any further decline. Market participants now await the release of the US ISM Services PMI This, along with the official EIA report on US crude inventories, could generate some significant business opportunities during the US session of today.

USD / CAD technical levels