- US dollar rebound from 1.2690 extends to levels near 1.2800.
- The lonie loses ground as oil prices fall.
- Longer term, USD/CAD is expected to remain neutral to negative – ScotiaBank.
The dollar rallied against its Canadian counterpart on Monday to cut losses after the 1.3% reversal seen late last week.
Canadian dollar falls as oil prices plunge
The Canadian dollar has opened the week with a weak base, weighed down by a sharp drop in oil prices. US benchmark WTI has fallen more than 8% on the day amid hopes for a Ukraine-Russia peace deal and investor concerns about another COVID-19 lockdown in China with contagion levels rising rapidly. .
On the other hand, market expectations that the US Federal Reserve will raise rates after its monetary policy meeting, scheduled for Wednesday, have buoyed US Treasuries, ultimately rising the upward pressure on the USD.
USD/CAD: Key support seen at 1.2695 – Scotiabank
However, Scotiabank FX analysts are skeptical about the US dollar rallying and remain eyeing the 1.2695 support area: “Wider neutral range persists despite some cutting around that point, but USD continues to attract fairly solid selling interest on rallies and we continue to see a bit more downside than upside risk for this market in the coming months (…) Key support is 1.2695 and we see the pair falling further materially below this point.
Technical levels
Source: Fx Street
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