USD/CAD rebounds from monthly lows, lacks follow-through beyond 1.3900 mark
- USD/CAD staged a modest recovery from fresh monthly lows, around mid-1.3800s.
- A sudden pickup in the USD demand seemed to be the only factor behind the uptick.
- Bullish oil prices might continue to underpin the loonie and cap any further gains.
The USD/CAD pair jumped to fresh session lows and was now looking to build on the intraday positive move further beyond the 1.3900 mark.
The pair stalled its recent sharp retracement slide to fresh monthly lows and managed to find some support near mid-1.3800s amid a sudden pickup in the US dollar demand. Following a lacklustre trading action through the major part of Thursday's trading action, the greenback gained some traction during the early North-American session.
The USD positive move followed the release of the US Initial Weekly Jobless Claims, which added to the recent market concerns about the economic fallout from the coronavirus-induced lockdowns. This coupled with a turnaround in the sentiment surrounding the equity markets provided an additional boost to the greenback's perceived safe-haven status.
Meanwhile, the Canadian dollar was further weighed down by the release of the worse-than-expected Raw Materials Price Index and monthly GDP print from Canada. However, the recent strong bullish run in crude oil prices might continue to underpin the commodity-linked currency – the loonie – and keep a lid on any runaway rally for the major.
Hence, it will be prudent to wait for some strong follow-through buying before confirming that the pair might have bottomed out in the near-term and positioning for any further near-term recovery, possibly back towards the key 1.40 psychological mark.
Technical levels to watch
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
