USD/CAD hangs closer to 14-month lows

Haresh Menghani FXStreet

The offered tone around the greenback remains unabated, with the USD/CAD pair hanging closer to 14-month lows around mid-1.2600s.

The pair failed to build on overnight modest recovery and ran through some fresh offers near the 1.2700 handle amid persistent greenback selling bias. The news report that Republicans rejected a revised version of Trump's health care bill renewed concerns over his ability to deliver on promised pro-growth economic policies and dragged the key US Dollar Index to levels last seen in September 2016 in the mid-94.00s.

However, a mildly weaker tone around crude oil prices did little to extend any support to the commodity-linked currency - Loonie. This coupled with a modest pickup in the US Treasury bond yields helped the pair to hold just above multi-month lows support near the 1.2630 region, at least for the time being.

• Fed seen rising rates by 25bps in Q4 2017 – Reuters poll

In absence of any major market moving economic releases, broader market sentiment around the buck would continue to act as an exclusive driver of the pair's movement through Tuesday's trading session.

Technical levels to watch

A follow through selling pressure below 1.2630-25 area could accelerate the slide towards the 1.2600 handle, below which the pair seems vulnerable to fall further, initially towards an intermediate support near mid-1.2500s ahead of the key 1.25 psychological mark.

On the flip side, any recovery attempts might continue to confront some fresh supply near the 1.2700 handle, above which a bout of short covering could lift the pair towards 1.2760-70 horizontal resistance. Momentum beyond the mentioned resistance levels is likely to get extended even beyond the 1.2800 mark towards its next major hurdle near 1.2860 level.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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