USD/CAD jumps to near two-week high, around 1.2625 amid broad-based USD strength

USD/CAD gained strong positive traction for the second successive day on Monday.
Fed rate hike bets, the prevalent risk-off mood boosted the safe-haven greenback.
An intraday pullback in oil prices undermined the loonie and remained supportive.

Haresh Menghani FXStreet

The USD/CAD pair built on its intraday ascent and climbed to a nearly two-week high, around the 1.2625 region heading into the North American session.

The pair attracted some dip-buying near the 1.2555 area on Monday and built on the previous session's positive move from the very important 200-day SMA amid a broad-based US dollar strength. The markets have fully priced in the prospects for an eventual Fed lift-off in March and expect a total of four rate hikes in 2022. This, along with the prevalent risk-off mood, provided a goodish lift to the safe-haven greenback and assisted the USD/CAD pair to gain traction for the second successive day.

On the other hand, an intraday pullback in crude oil prices undermined the commodity-linked loonie. This was seen as another factor that pushed the USD/CAD pair higher, taking along some short-term trading stops placed near the 1.2600 round-figure mark. Hence, the uptick could further be attributed to some technical buying. That said, any meaningful upside still seems elusive ahead of this week's key central bank event risks – the BoC and the FOMC monetary policy decisions on Wednesday.

The markets have been speculating that the Bank of Canada could increase rates as early as this week amid a jump in Canada’s annual inflation rate to a three-decade high in December. Apart from this, escalating geopolitical tensions between Russia and Ukraine as well as in the Middle East should limit the downside for crude oil prices. The fundamental backdrop makes it prudent to wait for a strong follow-through buying before confirming that the USD/CAD pair has bottomed out already.

Market participants now look forward to the release of the flash US PMI prints (Manufacturing and Services) for a fresh impetus. This, along with the broader market risk sentiment, will drive the USD demand. Traders will further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2621
Today Daily Change	0.0038
Today Daily Change %	0.30
Today daily open	1.2583

Trends
Daily SMA20	1.2643
Daily SMA50	1.2705
Daily SMA100	1.2622
Daily SMA200	1.2502

Levels
Previous Daily High	1.2584
Previous Daily Low	1.2499
Previous Weekly High	1.2584
Previous Weekly Low	1.2451
Previous Monthly High	1.2964
Previous Monthly Low	1.2608
Daily Fibonacci 38.2%	1.2551
Daily Fibonacci 61.8%	1.2531
Daily Pivot Point S1	1.2527
Daily Pivot Point S2	1.247
Daily Pivot Point S3	1.2442
Daily Pivot Point R1	1.2612
Daily Pivot Point R2	1.264
Daily Pivot Point R3	1.2697

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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