- USD/CAD reversed an early dip to over a one-week low amid the emergence of some USD buying.
- Bullish crude oil prices could underpin the loonie and keep a lid on any further gains for the major.
- The markets reacted little following the release of upbeat US Durable Goods Orders data for May.
The USD/CAD pair attracted some dip-buying near the 1.2865-1.2860 congestion zone and bounced nearly 40 pips from a one-and-half-week low touched earlier this Monday. The pair was last seen trading with modest intraday gains, around the 1.2900 round-figure mark heading into the North American session.
The US dollar reversed an intraday dip to over a one-week low amid a goodish pickup in the US Treasury bond yields, bolstered by the risk-on impulse in the markets. The emergence of some USD buying at lower levels turned out to be a key factor that offered some support to the USD/CAD pair. That said, an uptick in crude oil prices underpinned the commodity-linked loonie and might keep a lid on any meaningful upside for spot prices, at least for the time being.
Moves against Russian oil and gas exports that might come out of a meeting of leaders of the Group of Seven (G7) nations in Germany acted as a tailwind for the black liquid. That said, the prospects for a revival of the Iran nuclear deal, which might lead to more Iranian oil exports, could cap gains for the commodity. Traders might also be reluctant to place aggressive bets and prefer to move on the sidelines ahead of the OPEC+ meeting later this week.
Apart from this, investors will take cues from Fed Chair Jerome Powell's remarks in a panel discussion on Thursday that might help determine the near-term trajectory for the USD/CAD pair. In the meantime, the markets reacted little to the US macro data, which showed that Durable Goods Orders unexpectedly increased by 0.7% in May. Orders excluding transportation items also surpassed estimates and rose 0.7%, though failed to provide any impetus to the USD/CAD pair.
Nevertheless, spot prices, for now, seem to have stalled the recent pullback from the YTD peak, around the 1.3075-1.3080 region touched earlier this month and recovered a part of Friday's losses. Some follow-through buying has the potential to lift the USD/CAD pair towards the 1.2945 resistance zone, above which bulls might aim back to reclaim the 1.3000 psychological mark.
Technical levels to watch
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