- A combination of factors prompted aggressive selling around USD/CAD on Tuesday.
- The Canadian election outcome, rebounding crude oil prices underpinned the loonie.
- The risk-on impulse weighed on the safe-haven USD and contributed to the selling bias.
The USD/CAD pair extended the previous day's rejection slide from the 1.2900 mark and witnessed heavy follow-through selling on Tuesday, snapping three consecutive days of the winning streak. The pair remained depressed through the first half of the European session and was last seen hovering near the lower end of its daily trading range, around mid-1.2700s.
Canada's ruling Liberal Party – led by Prime Minister Justin Trudeau – returned to power in a closely contested election on Monday, though failed to gain an absolute majority. This, along with a goodish pickup in crude oil prices, benefitted the commodity-linked loonie. Apart from this, a modest US dollar weakness exerted downward pressure on the USD/CAD pair.
The risk-on impulse – as depicted by a solid rebound in the equity markets – turned out to be a key factor that weighed on the safe-haven greenback. That said, expectations for an imminent Fed taper announcement and a fresh leg up in the US Treasury bond yields, acted as a tailwind for the USD and helped limit any further losses for the USD/CAD pair.
Investors might also refrain from placing aggressive bets, rather prefer to wait for a fresh catalyst from the outcome of a two-day FOMC meeting starting this Tuesday. The focus will be on clues about the likely timing of the Fed's tapering plan, which will play a key role in influencing the USD and provide a fresh directional impetus to the USD/CAD pair.
Hence, any subsequent slide might still be seen as a buying opportunity and remain limited near the 1.2700 round-figure mark ahead of the key central bank event risk. The mentioned handle represents a one-week-old trading range resistance breakpoint and should act as a pivotal point for short-term traders amid a relatively thin economic docket on Tuesday.
Technical levels to watch
|Today last price||1.2757|
|Today Daily Change||-0.0069|
|Today Daily Change %||-0.54|
|Today daily open||1.2826|
|Previous Daily High||1.2896|
|Previous Daily Low||1.2751|
|Previous Weekly High||1.2774|
|Previous Weekly Low||1.2601|
|Previous Monthly High||1.2949|
|Previous Monthly Low||1.2453|
|Daily Fibonacci 38.2%||1.2841|
|Daily Fibonacci 61.8%||1.2807|
|Daily Pivot Point S1||1.2753|
|Daily Pivot Point S2||1.268|
|Daily Pivot Point S3||1.2608|
|Daily Pivot Point R1||1.2898|
|Daily Pivot Point R2||1.297|
|Daily Pivot Point R3||1.3043|
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.