USD/CAD consolidates in a range just above mid-1.2500s
|- USD/CAD witnessed a subdued/range-bound price action on the first day of a new week.
- Retreating crude oil prices undermined the loonie and extended some support to the pair.
- COVID-19 jitters, sliding US bond yields weighed on the greenback and capped the upside.
The USD/CAD pair extended its sideways consolidative price moves through the mid-European session and remained confined in a narrow trading band, just above mid-1.2500s.
A combination of diverging forces failed to provide any impetus to the USD/CAD pair, instead led to a subdued/range-bound price action on the first day of a new trading week. A modest pullback in crude oil prices undermined the commodity-linked loonie and extended some support. That said, a weaker US dollar capped any strong gains for the major.
Investors remain worried that the spread of the highly contagious Delta variant of the coronavirus could slow global fuel demand. Apart from this, reports of a crackdown by China on crude importers largely offset the recent optimism led by expectations of tight supplies and prompted some fresh selling around the black gold.
Meanwhile, the ongoing spread of COVID-19 across the US fueled fears about renewed restrictions on business and social life, which, in turn, weighed on the USD. Apart from this, a sharp intraday fall in the US Treasury bond yields – triggered by the risk-off impulse in the markets – was seen as another factor undermining the greenback.
In the absence of any major market-moving economic releases, either from the US or Canada, investors also seemed reluctant to place any aggressive bets ahead of the FOMC meeting, starting Tuesday. The outcome will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the USD/CAD pair.
Technical levels to watch
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