USD/CAD holds comfortably above 1.3900 mark, lacks follow-through amid rallying oil prices

USD/CAD edges higher on Thursday amid a modest pickup in the USD demand.
Escalating US-China tensions benefitted the USD’s perceived safe-haven status.
The ongoing bullish run in oil prices underpinned the loonie and capped gains.

Haresh Menghani FXStreet

The USD/CAD pair held on to its mildly positive tone through the early European session and was last seen trading with modest gains, comfortably above the 1.3900 round-figure mark. The uptick, however, lacked any strong follow-through and the pair remained well within a three-day-old trading range.

Growing market fears about the second wave of coronavirus infections and concerns over worsening US-China relations took its toll on the global risk sentiment. This coupled with Wednesday's dovish sounding FOMC meeting minutes benefitted the US dollar's perceived safe-haven status, which turned out to be one of the key factors that extended some support to the USD/CAD pair.

Tensions between the world's two largest economies escalated further after the US President Donald Trump accused China of running a massive disinformation campaign and mishandling the coronavirus outbreak at the initial stage. Adding to this, the US Senate passed a bill that could block some Chinese companies from selling shares on the American stock exchanges.

Meanwhile, a modest pickup in the USD demand, to some extent, was negated by the ongoing bullish momentum in crude oil prices. Signs of gradual demand recovery and a big drop in the US stockpiles led to the sixth consecutive day of a positive move in oil prices, which underpinned the commodity-linked currency – the loonie – and kept a lid on any strong gains for the major.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CAD pair might have formed a strong base near mid-1.3800s and positioning for any further near-term appreciating move.

Moving ahead, market participants now look forward to the US economic docket – featuring the release of Philly Fed Manufacturing Index, Initial Weekly Jobless Claims and Flash Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3928
Today Daily Change	0.0026
Today Daily Change %	0.19
Today daily open	1.3902

Trends
Daily SMA20	1.4022
Daily SMA50	1.4085
Daily SMA100	1.366
Daily SMA200	1.3439

Levels
Previous Daily High	1.3961
Previous Daily Low	1.3868
Previous Weekly High	1.4141
Previous Weekly Low	1.3901
Previous Monthly High	1.4299
Previous Monthly Low	1.385
Daily Fibonacci 38.2%	1.3904
Daily Fibonacci 61.8%	1.3926
Daily Pivot Point S1	1.386
Daily Pivot Point S2	1.3818
Daily Pivot Point S3	1.3768
Daily Pivot Point R1	1.3952
Daily Pivot Point R2	1.4003
Daily Pivot Point R3	1.4045

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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