USD/CAD drops to fresh daily low, approaches mid-1.2800s amid weaker USD

USD/CAD witnesses fresh selling on Monday amid modest USD weakness.
Retreating US bond yields, the risk-on impulse weighs on the safe-haven USD.
Bearish oil prices could undermine the loonie and help limit any further losses.

Haresh Menghani FXStreet

The USD/CAD pair attracts fresh selling on the first day of a new week and retreats further from a nearly three-week high, around the 1.2985 area touched on Friday. The intraday downtick extends through the mid-European session and drags spot prices to a fresh daily low, around the 1.2870 region in the last hour.

The US dollar struggles to capitalize on the post-NFP strong move up and edges lower on Monday, which turns out to be a key factor exerting downward pressure on the USD/CAD pair. Retreating US Treasury bond yields, along with a generally positive tone around the equity markets, temper the greenback's relative safe-haven status. The downside, however, seems cushioned, warranting some caution before placing aggressive bearish bets.

The upbeat US monthly jobs report released on Friday lifted bets for a larger, 75 Fed rate hike move at the September policy meeting. This should act as a tailwind for the US bond yields and help revive the USD demand. Crude oil prices, meanwhile, languished near a multi-month low, which should undermine the commodity-linked loonie and further contribute to limiting any meaningful downside for the USD/CAD pair, at least for the time being.

In the absence of any major market-moving economic releases, the US bond yields and the broader market risk sentiment would play a key role in driving the USD demand. Apart from this, traders will take cues from oil price dynamics to grab short-term opportunities around the USD/CAD pair. The focus, however, would remain on the release of the US consumer inflation figures on Wednesday, which might provide a fresh directional impetus to spot prices.

Technical levels to watch

USD/CAD

Overview
Today last price	1.287
Today Daily Change	-0.0067
Today Daily Change %	-0.52
Today daily open	1.2937

Trends
Daily SMA20	1.2909
Daily SMA50	1.2864
Daily SMA100	1.2785
Daily SMA200	1.2736

Levels
Previous Daily High	1.2985
Previous Daily Low	1.2861
Previous Weekly High	1.2985
Previous Weekly Low	1.2768
Previous Monthly High	1.3224
Previous Monthly Low	1.2789
Daily Fibonacci 38.2%	1.2938
Daily Fibonacci 61.8%	1.2908
Daily Pivot Point S1	1.287
Daily Pivot Point S2	1.2803
Daily Pivot Point S3	1.2746
Daily Pivot Point R1	1.2994
Daily Pivot Point R2	1.3052
Daily Pivot Point R3	1.3119

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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