USD/CAD seesaws near fresh three-month low amid trade optimism, weak WTI
|- USD/CAD bears look for clarity as the pair bounces off fresh three month low.
- Weak Oil prices, an absence of major drivers seem to favor the quote’s pullback.
- Trade headlines will keep the driver’s seat as economics lack in number ahead of the US session.
Despite flashing a fresh three-month low at the start of the session, the USD/CAD pair fails to extend the downpour while taking rounds to 1.3055 during Tuesday’s Asian session.
Optimism surrounding the trade negotiations between the United States (US) and China, coupled with upbeat Canadian fundamentals, has been dragging the Loonie pair downwards since early October.
The pair’s latest halt in the south run seems to be the result of weaker Oil prices. The WTI benchmark dropped from the monthly high on Monday amid rising concerns of increased inventories in the US. Also adding to the pair’s run-up could be the US Dollar’s (USD) pullback following the first negative daily closing in three days.
While a lack of trade news could continue to restrict pair’s moves, a light economic calendar will also be the reason for traders to know. It should, however, be noted that the US Pending Home Sales and Consumer Confidence data could fill in liquidity. Also, weekly release of the private Oil inventory numbers could as well direct energy prices and can direct the Loonie pair’s moves in turn.
Apart from short-term catalysts, markets will be closely analyzing clues for tomorrow’s monetary policy meetings by the Bank of Canada (BOC) and the US Federal Reserve to ascertain monetary policy divergence between the key central banks.
Technical Analysis
FXStreet Analyst Flavio Tosti highlights 1.3040, comprising lows marked on July 05 and 22, as the key support while saying:
USD/CAD is under selling pressure below its main SMAs. A downside break below the 1.3040 support can expose the 1.3000 handles. The pair is trading below the main Simple Moving Averages (SMA), suggesting a bearish bias in the near term. Resistance is seen at 1.3084 and 1.3140, according to the Technical Confluences Indicator.
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