Share:
  • USD/CAD climbed to nearly three-week tops on Tuesday, albeit lacked any follow-through.
  • Investors now turn cautious ahead of this week’s important events and key macro releases.
  • The formation of an ascending trend-channel supports prospects for some near-term gains.

A combination of factors assisted the USD/CAD pair to gain traction for the second straight session on Tuesday and climb to the highest level in nearly three weeks. A broad-based USD strength remains a key theme in the market amid the upbeat US economic outlook. The impressive pace of vaccinations and US President Joe Biden's spending plan have been fueling expectations for a relatively faster US economic recovery. Apart from this, a sharp intraday spike in the US Treasury bond yields provided an additional boost and pushed the key USD Index to over four-month tops. This, in turn, was seen as a key factor that extended some support to the major.

On the other hand, a softer tone around the oil market undermined the commodity-linked loonie and further contribute to the overnight positive move. Oil prices edged lower on Tuesday amid worries that the third wave of COVID-19 infections, pandemic-related lockdown and the slow vaccine rollouts in Europe could hinder the anticipated recovery in demand for fuel products. That said, expectations that OPEC+ members will agree to roll over the supply curbs into May helped limit any further losses, rather helped the commodity to recover a part of the previous day's slide and exerted some pressure on the major during the Asian session on Wednesday.

Meanwhile, the downside remains cushioned, at least for the time being, as investors refrained from placing aggressive bets ahead of the key events/macro releases. US President Joe Biden will outline details about the first stage of his infrastructure spending plan of around $3 trillion to $4 trillion later this Wednesday, while the OPEC and allies – together called OPEC+ – are set to meet on Thursday. On the economic data front, investors on Wednesday will confront the release of the ADP report on the US private-sector employment and monthly Canadian GDP report. This, along with Friday's release of the closely-watched US monthly jobs report (NFP) should provide a fresh directional impetus to the major.

Short-term technical outlook

From a technical perspective, the pair has been trending higher along an upward sloping channel over the past one week or so. The lower boundary of the mentioned trend-channel, currently around the 1.2600 mark, coincides with 100-hour EMA and should now act as a key pivotal point for intraday traders. A sustained breakthrough, leading to a subsequent slide below the overnight swing low, around the 1.2580 area will be seen as a fresh trigger for bearish traders. The pair might then accelerate the fall further towards challenging the key 1.2500 psychological mark.

On the flip side, the 1.2630-40 region now seems to have emerged as immediate strong resistance. Above the mentioned hurdle, the pair might aim to test the trend-channel hurdle, currently near the 1.2675-80 region. Some follow-through buying will mark a bullish breakout and push the pair further beyond the 1.2700 mark, towards the next major hurdle near the 1.2735-40 supply zone, or monthly tops touched on March 5.

fxsoriginal

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

AUD/USD holds above 0.6600 ahead of the US PMI, Fed’s Powell speech

AUD/USD holds above 0.6600 ahead of the US PMI, Fed’s Powell speech

The AUD/USD pair holds above the 0.6600 psychological mark during the early Asian session on Friday. However, the rebound of the US Dollar might cap the pair’s upside in the near term. Meanwhile, the US Dollar Index surges to 103.50 while the US Treasury bond yield edge higher.

AUD/USD News

EUR/USD hovers around 1.0900 amid falling inflation, focus on ECB’s Lagarde’s speech

EUR/USD hovers around 1.0900 amid falling inflation, focus on ECB’s Lagarde’s speech

The EUR/USD pair hovers around the 1.0900 psychological mark after retracing from the multi-month high of 1.1017 during the early Asian trading hours on Friday. Falling inflation and a stagnant economy in the Eurozone fuel hopes that interest rates could soon be cut. 

EUR/USD News

Gold recovers its losses near $2,040, focus on US PMI, Fed’s Powell speech

Gold recovers its losses near $2,040, focus on US PMI, Fed’s Powell speech

Gold price recovers its recent losses near $2,040 during the early Asian session on Friday. The anticipation that the Federal Reserve to hold rates steady and perhaps start cutting in 2024 weighs on the US Dollar and lends some support to the USD-denominated gold.

Gold News

Cosmos Price Prediction: ATOM eyes 10% gains amid chatter about a fork

Cosmos Price Prediction: ATOM eyes 10% gains amid chatter about a fork

Cosmos price is trading with a bullish bias despite a rejection from the $10.218 resistance level. The optimism comes on the back of chatter of a possible fork, expected to result in an airdrop, an outcome that would be effectively bullish for Cosmos Hub.

Read more

A November to remember

A November to remember

The narrative for November can be characterized as a story of realization, recognition, and capitulation, particularly regarding the direction of interest rates and the outlook ahead. The month commenced with yields on 10-year Treasuries at 4.90%, but they are now poised to conclude nearly 60 basis points lower, providing a favourable boost to stock valuations.

Read more

Majors

Cryptocurrencies

Signatures