USD/CAD flirts with 1.3040 horizontal support amid weaker USD, bullish oil prices


  • 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

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD: Bears hold the grip, critical challenge at 1.2000

The greenback firmed up at the end of the week, closing it with substantial gains against most major rivals. Renewed coronavirus concerns and poor macroeconomic data spurred risk-off. EUR/USD is firmly bearish.

EUR/USD News

GBP/USD: Further restrictions in the UK may hit the pound

The GBP/USD pair trimmed most of its weekly gains on Friday and settled in the 1.3580 price zone, amid risk-off fueling dollar’s demand. UK GDP contracted by less than anticipated in November, Industrial Production plunged.

GBP/USD News

Gold: Further decline toward $1,800 remains on the cards

Gold failed to stage a convincing rebound this week. After losing more than 2% in the previous week, the XAU/USD pair extended its slide on Monday and touched its lowest level since early December at $1,817. 

Gold news

Darkest fefore dawn

The upcoming economic news is likely to be dreadful, and if it is not dreadful, it will be mostly ignored. This includes the release of the preliminary January PMI figures at the end of the week. Japan is extending its national emergency to another five prefectures, which collectively account for over half of the nation's GDP.

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures