USD/CAD hangs near daily low, just above mid-1.3300s amid rising oil prices/weaker USD

USD/CAD turns lower for the second straight day and is pressured by a combination of factors.
Bullish Crude Oil prices underpin the Loonie and weigh on the pair amid renewed USD selling.
Traders now look forward to the US PPI and Retail Sales data for short-term opportunities.

Haresh Menghani FXStreet

The USD/CAD pair attracts fresh selling on Wednesday following an early uptick to the 1.3410 area and turns lower for the second successive day. The steady intraday descent drags spot prices to a fresh weekly low, around mid-1.3300s, during the first half of the European session and is sponsored by a combination of factors.

Crude Oil prices climb to the highest level since early December amid the optimism that the easing of strict COVID-19 curbs in China will boost fuel demand. This, in turn, underpins the commodity-linked Loonie, which, along with the emergence of heavy intraday selling around the US Dollar, exerts some downward pressure on the USD/CAD pair.

In fact, the USD Index, which tracks the Greenback's performance against a basket of currencies, fails to preserve its strong intraday gains amid bets for a less aggressive policy tightening by the Fed. The markets now seem convinced that the Fed will soften its stance and have been pricing in a smaller 25 bps rate hike in February.

The bets were reaffirmed by the US CPI report released last week, which pointed to signs of easing inflationary pressure. This led to a fresh leg down in the US Treasury bond yields and is seen weighing heavily on the Greenback, dragging the USD/CAD pair back closer to its lowest level since November 25 touched on Friday.

Market participants now look to the US economic docket, highlighting the release of the Producer Price Index and monthly Retail Sales later during the early North American session. This, along with speeches by influential FOMC members, the US bond yields and the broader market risk sentiment, will drive the USD demand.

Apart from this, traders will take cues from Oil price dynamics to grab short-term opportunities around the USD/CAD pair. Nevertheless, the fundamental backdrop seems tilted in favour of bears and suggests that the path of least resistance for spot prices is to the downside. Hence, any attempted recovery could get sold into.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3358
Today Daily Change	-0.0030
Today Daily Change %	-0.22
Today daily open	1.3388

Trends
Daily SMA20	1.351
Daily SMA50	1.3495
Daily SMA100	1.3503
Daily SMA200	1.3177

Levels
Previous Daily High	1.3437
Previous Daily Low	1.3369
Previous Weekly High	1.3461
Previous Weekly Low	1.3322
Previous Monthly High	1.3705
Previous Monthly Low	1.3385
Daily Fibonacci 38.2%	1.3395
Daily Fibonacci 61.8%	1.3411
Daily Pivot Point S1	1.3359
Daily Pivot Point S2	1.333
Daily Pivot Point S3	1.3291
Daily Pivot Point R1	1.3427
Daily Pivot Point R2	1.3466
Daily Pivot Point R3	1.3494

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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