USD/CAD moves away from over two-month low, climbs beyond mid-1.3500s amid bearish Oil prices

USD/CAD scales higher for the second straight day amid bearish Crude Oil prices.
The risk-off mood benefits the safe-haven USD and contributes to the downfall.
The US macro data could provide some impetus ahead of the BoC on Wednesday.

Haresh Menghani FXStreet

The USD/CAD pair builds on the previous day's recovery move from the 1.3480 region, or its lowest level since September 29 and gains positive traction for the second successive day on Tuesday. The momentum lifts spot prices to a three-day top, beyond mid-1.3500s during the Asian session and is sponsored by bearish Crude Oil prices.

Investors remain, sceptic, that supply cuts by OPEC+ would have a significant impact on the back of a darkening global economic outlook, which is expected to dent fuel demand. This, in turn, drags the black liquid back closer to a multi-month low touched in November, which is seen undermining the commodity-linked Loonie and lending some support to the USD/CAD pair. Apart from this, expectations that the Bank of Canada (BoC) will start cutting interest rates in the second quarter of 2024 further seem to weigh on the Canadian Dollar (CAD).

The US Dollar (USD), on the other hand, draws some support from the global flight to safety, though dovish Federal Reserve (Fed) expectations keep a lid on any further gains. Market participants now seem convinced that interest rates in the US have peaked and that the Fed will start easing its monetary policy as soon as March 2024. This leads to a fresh leg down in the US Treasury bond yields, which holds back the USD bulls from placing aggressive bets and might keep a lid on any meaningful appreciating move for the USD/CAD pair.

The aforementioned mixed fundamental backdrop makes it prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out in the near term and positioning for any further gains. Traders now look to the US economic docket, featuring the release of ISM Services PMI and JOLTS Job Openings data. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand. Apart from this, Oil price dynamics should provide some impetus to the USD/CAD pair ahead of the BoC decision on Wednesday.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3559
Today Daily Change	0.0019
Today Daily Change %	0.14
Today daily open	1.354

Trends
Daily SMA20	1.3683
Daily SMA50	1.3687
Daily SMA100	1.3566
Daily SMA200	1.3517

Levels
Previous Daily High	1.3562
Previous Daily Low	1.348
Previous Weekly High	1.3661
Previous Weekly Low	1.3487
Previous Monthly High	1.3899
Previous Monthly Low	1.3541
Daily Fibonacci 38.2%	1.3531
Daily Fibonacci 61.8%	1.3511
Daily Pivot Point S1	1.3493
Daily Pivot Point S2	1.3446
Daily Pivot Point S3	1.3411
Daily Pivot Point R1	1.3575
Daily Pivot Point R2	1.361
Daily Pivot Point R3	1.3657

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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