USD/CAD corrects from 5-week tops, weakens farther below 1.3100 handle
| • Investors looked past Friday’s softer Canadian inflation and retail sales data.
• Subdued USD demand fails to build on the momentum beyond 1.3100 mark.
• Market focus shifts to this week’s key event risk – BoC monetary policy decision.
After an initial uptick to the 1.3120 region, the USD/CAD pair met with some fresh supply and has now reversed Friday's up-move to five-week tops.
With investors looking past weaker Canadian inflation and retail sales data, a subdued US Dollar price-action failed to assist the pair to build on its momentum beyond the 1.3100 handle.
Deteriorating US-Saudi relations, following the disappearance of journalist Jamal Khashoggi, coupled with a mildly softer tone around the US Treasury bond yields kept the USD bulls on the defensive at the start of a new trading week.
Adding to this, some renewed pickup in crude oil prices underpinned demand for the commodity-linked currency - Lonnie and further collaborated to the pair's modest retracement through the early European session on Monday.
Despite a modest pull-back, the pair has managed to hold its neck above 100-day SMA, which has been acting as a key hurdle over the past one month or so and hence, it would be prudent to wait for a strong follow-through selling before confirming that the pair might have topped out in the near-term.
In absence of any major market moving economic releases, the pair remains at the mercy of broader market sentiment surrounding the buck and oil price dynamics ahead of this week's key event risk - the latest BoC monetary policy update on Wednesday.
Technical levels to watch
Immediate support is now pegged near the 1.3070-65 region (100-DMA), below which the pair is likely to accelerate the corrective slide towards 1.3030-25 support area en-route the key 1.30 psychological mark.
On the flip side, the 1.3120-30 region now seems to have emerged as an immediate strong hurdle, which if cleared should assist the pair to aim towards reclaiming the 1.3200 round figure mark.
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