• USD/CAD retreats a few pips from its highest level since June 2020 touched earlier this Monday.
  • The USD surrenders its intraday gains to a two-decade high and acts as a headwind for the pair.
  • Aggressive Fed rate hike bets, rising US bond yields should limit any meaningful USD pullback.
  • Bearish crude oil prices could undermine the loonie and supports prospects for additional gains.

The USD/CAD pair attracts some sellers in the vicinity of the 1.3700 mark and retreats a few pips from its highest level since June 2020 touched during the early North American session. The pair is now trading around the 1.3635-1.3630 region, still up over 0.30% for the day.

The US dollar surrenders a major part of its intraday gains to a two-decade high and turns out to be a key factor acting as a headwind for the USD/CAD pair. The USD pullback could be solely attributed to some profit-taking amid a solid recovery in the British pound and extremely overbought conditions.

That said, growing acceptance that the Fed will tighten its monetary policy at a faster pace should limit the USD corrective pullback. It is worth recalling that the Fed signalled last week that it will likely undertake more aggressive increases at its upcoming meetings to tame inflation.

The Fed's hawkish outlook pushes the yield on the rate-sensitive 2-year US government bond to a 15-year peak and the benchmark 10-year Treasury note to its highest level in 11 years. This, along with the prevalent risk-off environment, should continue to boost demand for the safe-haven greenback.

Apart from this, the underlying bearish sentiment surrounding crude oil prices, amid fears that a deeper global economic downturn will dent fuel demand, is seen undermining the commodity-linked loonie. This, in turn, supports prospects for a further near-term appreciating move for the USD/CAD pair.

In the absence of any major market-moving economic releases, either from the US or Canada, traders on Monday will take cues from speeches by influential FOMC members. This, along with the US bond yields and the broader risk sentiment, will influence the USD and provide impetus to the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price 1.3633
Today Daily Change 0.0039
Today Daily Change % 0.29
Today daily open 1.3594
 
Trends
Daily SMA20 1.3202
Daily SMA50 1.3014
Daily SMA100 1.2939
Daily SMA200 1.2811
 
Levels
Previous Daily High 1.3613
Previous Daily Low 1.3468
Previous Weekly High 1.3613
Previous Weekly Low 1.3227
Previous Monthly High 1.3141
Previous Monthly Low 1.2728
Daily Fibonacci 38.2% 1.3557
Daily Fibonacci 61.8% 1.3523
Daily Pivot Point S1 1.3504
Daily Pivot Point S2 1.3414
Daily Pivot Point S3 1.3359
Daily Pivot Point R1 1.3648
Daily Pivot Point R2 1.3703
Daily Pivot Point R3 1.3793

 

 

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