• A combination of factors prompted some fresh selling around USD/CAD on Tuesday.
  • Dovish Fed expectations, COVID-19 vaccine optimism weighed on the safe-haven USD.
  • Positive oil prices underpinned the loonie and contributed to the intraday selling bias.

The USD/CAD pair traded with a negative bias through the early European session and was last seen flirting with a strong horizontal support, around the 1.3045-40 region.

Following the previous day's good two-way price swings, the pair met with some fresh supply on Tuesday and was being pressured by a combination of factors. The US dollar struggled to capitalize on its overnight goodish rebound that came following the release of upbeat US PMI prints for November. Apart from this, a positive tone around crude oil prices underpinned the commodity-linked loonie and exerted some pressure on the USD/CAD pair.

The greenback remained depressed on the back of growing market speculations that the Fed might ease monetary policy in December amid concerns about the economic fallout from the continuous surge in new coronavirus cases. Adding to this, the latest optimism over a potential early rollout of COVID-19 vaccines remained supportive of the prevalent risk-on environment. This added to the selling bias surrounding the safe-haven greenback.

Meanwhile, additional reports of successful COVID-19 vaccine trials revived hopes for a speedy global economic recovery and a pickup in energy demand. It is worth recalling that AstraZeneca said on Monday its COVID-19 vaccine was 70% to 90% effective in pivotal trials. This, in turn, pushed WTI crude oil prices to the highest level since March and benefitted the Canadian dollar, which further contributed to the USD/CAD pair's intraday slide.

From a technical perspective, sustained weakness below the 1.3040 support zone will be seen as a fresh trigger for bearish traders and turn the USD/CAD pair vulnerable to break below the key 1.3000 psychological mark. The downward trajectory could further get extended towards monthly swing lows, around the 1.2930-25 region.

Market participants now look forward to the US economic docket, featuring the releases of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index. The data, along with the broader market risk sentiment, might influence the USD price dynamics and assist traders to grab some short-term opportunities.

Technical levels to watch

USD/CAD

Overview
Today last price 1.3044
Today Daily Change -0.0037
Today Daily Change % -0.28
Today daily open 1.3081
 
Trends
Daily SMA20 1.3133
Daily SMA50 1.3194
Daily SMA100 1.3252
Daily SMA200 1.3533
 
Levels
Previous Daily High 1.3112
Previous Daily Low 1.3046
Previous Weekly High 1.3142
Previous Weekly Low 1.3034
Previous Monthly High 1.339
Previous Monthly Low 1.3081
Daily Fibonacci 38.2% 1.3071
Daily Fibonacci 61.8% 1.3087
Daily Pivot Point S1 1.3047
Daily Pivot Point S2 1.3013
Daily Pivot Point S3 1.298
Daily Pivot Point R1 1.3114
Daily Pivot Point R2 1.3147
Daily Pivot Point R3 1.3181

 

 

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