USD/CAD refreshes multi-year lows, bears await sustained break below 1.2100 mark

USD/CAD dropped to the lowest level since September 2017 during the early European session.
A modest uptick in the US bond yields benefitted the USD and extended some support to the pair.
Hawkish BoC outlook, bullish oil prices underpinned the loonie and capped any meaningful upside.

Haresh Menghani FXStreet

The USD/CAD pair reversed an early European session dip to sub-1.2100 level, or fresh multi-year lows and was last seen trading with only modest losses, around the 1.2110-15 region.

The pair continued with its struggle to register any meaningful recovery and remained depressed through the first half of the trading action on Monday. The Canadian dollar remained well supported by a more hawkish Bank of Canada decision to bring forward the guidance for the first interest rate hike to the second half of 2022. Apart from this, a bullish gap opening in crude oil prices further underpinned the commodity-linked loonie and dragged the USD/CAD pair to the lowest level since September 2017.

The negative factor, to some extent, was offset by a modest uptick, which helped limit any further losses for the USD/CAD pair, at least for now. As investors looked past Friday's dismal NFP report, a goodish pickup in the US Treasury bond yields assisted the USD to stage a modest rebound from more than two-month lows. That said, expectations that the Fed will keep interest rates low for a longer period might continue to act as a headwind for the USD. This, in turn, should continue to cap the upside for the USD/CAD pair.

The fundamental backdrop remains tilted in favour of bearish traders and supports prospects for an extension of the recent well-established downward trajectory. That said, extremely oversold RSI (14) on the daily chart warrants some near-term consolidation before the next leg down. This, in turn, warrants some caution before placing fresh bearish bets amid absent relevant market-moving economic releases, either from the US or Canada.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2111
Today Daily Change	-0.0016
Today Daily Change %	-0.13
Today daily open	1.2127

Trends
Daily SMA20	1.2406
Daily SMA50	1.2504
Daily SMA100	1.2617
Daily SMA200	1.2874

Levels
Previous Daily High	1.2194
Previous Daily Low	1.2122
Previous Weekly High	1.2352
Previous Weekly Low	1.2122
Previous Monthly High	1.2654
Previous Monthly Low	1.2266
Daily Fibonacci 38.2%	1.215
Daily Fibonacci 61.8%	1.2167
Daily Pivot Point S1	1.2102
Daily Pivot Point S2	1.2076
Daily Pivot Point S3	1.203
Daily Pivot Point R1	1.2173
Daily Pivot Point R2	1.2219
Daily Pivot Point R3	1.2245

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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