USD/CAD bears stay hopeful at 1.2700 as oil bulls eye Russia’s nuclear alarm
- USD/CAD printed the biggest daily loss of 2022 on Friday as risk-off mood escalated.
- Russia President Putin puts nuclear deterrence forces on high alert.
- Ukraine-Russia talks can trigger risk-on mood but nothing positive so far as West escalates pressure on Moscow with harsh sanctions.
- Canada Q4 Current Account, second-tier US data may decorate calendar but risk catalysts are crucial to follow.
USD/CAD portrayed the heaviest weekly loss in six by the end of Friday, poking 1.2700 at the latest. In doing so, the Loonie pair also marked the heaviest daily fall of 2022 as oil bulls remain hopeful over the Russia-Ukraine crisis.
With major currency pairs marking the week-start gaps to justify the risk-off mood in the market, due to weekend headlines from Russia and Ukraine, USD/CAD traders remain on the edge as the quote broke monthly support on Friday.
After the initial hesitance, the Western leaders finally agreed to cut some of the Russian banks from the SWIFT international payment system, also marked sanctions on the Russian central bank, to portray their dislike of Moscow’s invasion of Ukraine. In a reaction, Russian President Vladimir Putin puts nuclear deterrence forces on high alert and offered another blow to the market sentiment.
However, headlines conveying the Ukraine-Russia peace talks, at the Belarus-Ukrainian border, may offer a sigh of relief and could help the USD/CAD pare recent losses as the Asian markets gain momentum on Monday morning.
It’s worth noting that WTI crude oil prices, Canada’s key export item, printed ‘Gravestone Doji’ bearish candlestick on the weekly chart while closing around $91.80 on Friday.
That said, Canada’s Q4 Current Account will join the US trade numbers for January and Chicago Purchasing Managers’ Index for February to decorate the calendar for short-term directions to the USD/CAD traders. However, risk catalysts will be crucial, especially the Russia-Ukraine headlines.
Technical analysis
USD/CAD recently broke a monthly support line, around 1.2710 by the press time, which in turn directs the quote towards the 100-DMA level surrounding 1.2630. However, the 50-DMA level tests the downside momentum near the 1.2700 threshold.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
