USD/CAD: Bulls eye 1.3600, as USD pops, WTI drops amid risk-off

Amid souring risk sentiment in early Europe, USD/CAD accelerates its Asian bounce from near 1.3525 region, helped by the broad-based US dollar recovery.

The greenback stages a solid comeback vs. its major peers, as the shift in the market mood underpins its haven demand. The US dollar index rises 0.12% to 96.84, recovering from eight-day lows of 96.57.

Fears over the second-wave of coronavirus intensified after the Australian state of Victoria imposed a six-week lockdown for Melbourne city, in order to stop the virus spiraling out of control. Meanwhile, the virus situation worldwide also looks far from improving.

Further, the reduced appetite for the risk asset translates into fresh weakness in the higher-yielding oil, WTI, which weighs negatively on the resource-linked Loonie. WTI extends its retreat from two-week tops and challenges the 40 barrier, at the press time.

Adding to the pain in the Canadian dollar, a Bank of Canada (BOC) survey showed on Monday, the business sentiment in the country is “strongly negative” even as coronavirus restrictions have eased. The central bank’s business outlook indicator plunged to near the lowest levels seen during the Global Financial Crisis (GFC).

In the day ahead, the pair will continue to track the US dollar price-action and the broader market sentiment ahead of the second-tier macro news from both the North American nations.

USD/CAD technical levels

An upside clearance of 21-day SMA, at 1.3571 now, will trigger a fresh recovery move targeting the June 26 top close to 1.3715. However, 1.3630 can act as an intermediate halt during the rise. The sellers are targeting a 200-day SMA level around 1.3500 as immediate support. However, the pair’s further downside becomes less anticipated amid bullish MACD, explains FXStreet’s Analyst Anil Panchal notes.

USD/CAD additional levels