USD/CAD clings to modest gains, remains below 1.3700 mark
|- A combination of factors assisted USD/CAD to regain some positive traction on Tuesday.
- Concerns about the ever-increasing coronavirus cases benefitted the safe-haven greenback.
- A mildly weaker tone around oil prices undermined the loonie and remained supportive.
- A sustained move beyond the 1.3700 mark needed to increase prospects for further gains.
The USD/CAD pair edged higher during the early European session and refreshed daily tops, around the 1.3690 region in the last hour.
Following the previous day's intraday pullback and a brief consolidation through the early part of Tuesday's trading action, the pair managed to regain some positive traction and was being supported by a combination of factors.
The US dollar was back in demand amid fading hopes of a sharp V-shaped global economic recovery. The ever-increasing number of coronavirus cases served as a warning signal that the road to recovery will be much slower than expected.
Meanwhile, possibilities of renewed lockdown measures to contain the outbreak dampened prospects for a swift recovery in the fuel demand. This led to some weakness in oil prices and undermined the commodity-linked currency – the loonie.
However, the USD/CAD pair has repeatedly failed to find acceptance, or build on the momentum beyond the 1.3700 mark. The recent price action warrants some caution before positioning for any further near-term appreciating move.
Moving ahead, market participants now look forward to the US economic docket – featuring the release of Chicago PMI and the Conference Board's Consumer Confidence Index. Apart from this, the Fed Chair Jerome Powell is scheduled to testify before the House Financial Services Committee along with the US Treasury Secretary Steven Mnuchin. This might eventually influence the USD price dynamics and produce some short-term trading opportunities.
Technical levels to watch
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