- USDCAD falls to its lowest level since September 22 amid the appearance of new selling around the dollar.
- Diminishing odds of a more aggressive Fed rate hike and risk appetite weigh on the dollar.
- The decline in crude oil prices could weigh on the CAD and give the pair some support.
The USDCAD fails to capitalize on its intraday rally and finds fresh selling near the 1.3555 area during the European session on Monday. The pair falls to the area of 1.3465, the lowest level since September 22and is under pressure from the prevailing selling bias around the US dollar.
In fact, the dollar index, which measures the evolution of the greenback against a basket of currencies, extends the fall after the NFP and turns negative for the second time in a row. The mixed results of the monthly report on jobs in the US fueled the speculation that the Fed could slow the pace of future rate hikes. This, coupled with an intraday positive turn in risk sentiment, is seen as weighing on the USD as a safe haven.
The Canadian dollar, meanwhile, could continue to receive support from the national employment data, which was a success. Apart from this, the appearance of some buying around crude oil prices could support the CAD, currency linked to raw materials, and supports the prospects of a further downward movement of the USDCAD pair. Also, acceptance below the 50-day SMA around the psychological level of 1.3500 adds credence to the negative outlook.
Having said that, China’s commitment to stick to its strict zero-COVID policy may have dashed hopes of a rebound in oil demand in the world’s top crude importer. This could act as a headwind for black gold and give USDCAD some support, at least for now. In the absence of market-relevant economic releases, the fundamental factors mentioned above will continue to play a key role in influencing the pair.
USDCAD technical levels
Source: Fx Street
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