USD/CAD consolidates near weekly tops, around 1.4100 mark

The USD/CAD pair was seen oscillating in a narrow trading band around the 1.4100 mark and consolidated its recent gains to weekly tops. A combination of diverging forces failed to provide any meaningful impetus to the pair and led to a subdued/range-bound trading action through the early European session on Thursday.

The US dollar remained well supported by the fact that the Fed Chair Jerome Powell, in a highly anticipated speech on Wednesday, rejected the idea of negative interest rates. This comes amid fears over the second wave of coronavirus infections and fading hopes about a quick economic recovery. This, in turn, weighed on investors' sentiment and further benefitted the greenback's perceived safe-haven status.

On the other hand, the commodity-linked loonie was underpinned by a goodish pickup in oil prices, now up over 2% for the day. Oil prices edged higher on Thursday amid the latest optimism over Saudi Arabia's commitment to further deepen production cuts in June and an unexpected decline in the US crude inventories. The US Energy Information Administration (EIA) reported a 745,000-barrel decrease in inventories.

It will now be interesting to see if the pair is able to gain any meaningful traction or the lack of any fresh buying suggests that this week's strong positive move of over 200 pips from the 1.3900 mark might have already run out of the steam.

Moving ahead, market participants now look forward to the US Initial Weekly Jobless Claims, which might influence the USD price dynamics. This coupled with the release of the BoC Financial System Review and a scheduled speech by the BoC Governor Stephen Poloz should produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch