USD/CAD fades corrective pullback below 1.2100
|- USD/CAD fails to keep the bounce off 1.2061, struggles for direction after two-day downtrend.
- US dollar weakness supersedes WTI pullback, market sentiment remains sluggish.
- Risk catalysts remain the key amid a light calendar.
USD/CAD remains depressed around 1.2065, following a two-day south-run, amid Tuesday’s Asian session. In doing so, the Loonie pair fizzles the previous day’s corrective pullback from 1.2061 while extending losses amid mildly upbeat S&P 500 Futures.
Market mood worsened on Monday after the US NY Empire State Manufacturing Index rose past downbeat forecasts. The same weighed on the Wall Street benchmarks. However, the US dollar’s weakness and WTI strength favored USD/CAD sellers the previous day.
The US dollar seems to look for fresh clues amid reflation and might have considered the recent easing of activity restrictions in the US to mark another daily loss. Canada’s key export item, WTI, on the other hand, seems to have benefited from the geopolitical tension emanating from the Middle East and the greenback’s weakness.
It should be noted that the traders recently consolidate the previous day’s downbeat momentum while flashing mild gains of S&P 500 Futures, which in turn exert additional downside pressure on USD/CAD even as WTI eases above $66.00.
Considering an absence of major data/events from either the US or Canada, USD/CAD pair traders should observe risk catalysts and the US dollar moves. Among the risk headlines, inflation and the coronavirus (COVID-19) become the key.
Technical analysis
Given the USD/CAD pair’s failures to cross 1.2200 during the last week’s recovery moves, sellers seem prepared to refresh the multi-month low, marked on May 12, while targeting the 1.2000 psychological magnet.
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