USD/CAD sellers eye 1.2700 amid US dollar weakness, WTI strength
|- USD/CAD stays depressed near two-week low, prints three-day losing streak.
- US dollar remains pressured amid risk-on mood, upbeat Treasury yields.
- Oil benefits from supply cut fears, demand optimism.
- US stimulus headlines, virus/vaccine news can entertain traders during a light calendar day.
USD/CAD holds lower ground near 1.2740 during the initial Asian session on Tuesday. The quote dropped to the late January lows while extending Friday’s drop from 1.2832 during the previous day. While looking for the catalysts, the DXY’s extended pullback from a two-month high as well as WTI’s jump to the fresh multi-month top favor the USD/CAD buyers.
The US dollar index (DXY) dropped below 91.00, currently around 90.95, while stretched its correction from the multi-day high. Behind moves are the hopes concerning US President Joe Biden’s $1.9 trillion covid relief package as well as an uptick in the US 10-year Treasury yields to the highest since March 2020.
Also favoring the mood could be the trade-positive chatters from the envoys of the UK, Europe and Australia for the US. Not only the Aussie push to the US for transatlantic trade deal but chatters that London and Brussels are up for solving the battle with American over aircraft subsidies also favor the mood.
That said, S&P 500 Futures print 0.10% intraday loss while consolidating the latest gains from the record top whereas the US 10-year Treasury yields remain firm around 1.16% by press time.
It’s worth mentioning that oil is Canada’s biggest item and hence the latest jump in WTI prices to the highest since January 2020 also favors USD/CAD bears.
Read: WTI: Buyers attack $58.00 as US stimulus hopes back energy optimists, API in focus
Looking forward, a lack of major data/events keeps USD/CAD traders on the lookout for risk catalysts for fresh direction. It should, however, be noted that the bears keep the reins, for now.
Technical analysis
Not only steady weakness from January top but the recent downside break of 21-day SMA, at 1.2743 now, also favor USD/CAD sellers.
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