USD/CAD drops to mid-1.24s as greenback remains under pressure

USD/CAD fails to rise above the 1.25 handle on Monday.
US Dollar Index stays near the daily low of 90.20.
Uncertainty surrounding US government shutdown persists.

Eren Sengezer FXStreet

The USD/CAD pair came under a renewed selling pressure during the early NA session and broke below its narrow trading band to refresh a daily low at 1.2442. As of writing, the pair was trading a couple of pips above that level, where it was down 0.4% on the day.

Amid a lack of fresh fundamental drivers at the start of the week, the pair's trading action is being dominated by the US Dollar Index's movements. After edging higher toward the mid-90s during the European session, the US Dollar Index lost its traction with the greenback having a difficult time finding demand amid uncertainty whether or not the U.S. government would remain shut. Speaking to Fox News earlier, White House legislative director Short said that he wasn't sure if the Senate would have the necessary 60 votes to pass the bill to reopen the government.

Earlier in the session, the data from Canada showed following a 1.5% increase in October, wholesale sales rose by 0.7% in November, failing to meet the market consensus of 1%. On the other hand, crude oil prices stay in a consolidation phase, failing to provide a directional clue to the commodity-sensitive loonie. The barrel of West Texas Intermediate trading in a tight range a little above the $63 mark.

Technical outlook

The pair could encounter the first technical support at 1.2405/00 (Jan. 15 low/psychological level) ahead of 1.2355 (Jan. 5 low) and 1.2255 (Sep. 22 low). On the upside, resistances align at 1.2500 (psychological level), 1.2580 (Jan. 10 high) and 1.2645 (100-DMA).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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