- USD/CAD managed to attract some dip-buying near 1.2700 mark on Wednesday.
- The ongoing pullback in the US bond yields held the USD bulls on the defensive.
- Bullish oil prices should continue to underpin loonie and cap gains for the major.
The USD/CAD pair edged higher during the early European session and climbed to fresh session tops, around the 1.2725-30 region in the last hour.
The pair managed to find some support ahead of the weekly lows and for now, seems to have stalled this week's sharp pullback from the 1.2835 region, though lacked any strong follow-through. A combination of factors might hold back investors from placing aggressive bullish bets and keep a lid on any meaningful upside for the USD/CAD pair.
Crude oil prolonged the recent strong bullish run and rose for the seventh consecutive session on Wednesday. The momentum was supported by Tuesday's API data that showed a larger-than-expected drop in US inventories and pushed spot prices to the highest level since February. This, in turn, was seen underpinning the commodity-linked loonie.
On the other hand, the US dollar was weighed down by the ongoing pullback in the US Treasury bond yields and the underlying bullish sentiment in the global financial markets. In fact, the yield on the benchmark 10-year US government bond retreated further from multi-month tops touched on Tuesday and held the USD bulls on the defensive.
Meanwhile, the global risk sentiment remained well supported by hopes for a strong global economic recovery and expectations of a more aggressive US fiscal spending in 2021. Investors remained hopeful that President-elect Joe Biden would push for a multi-trillion stimulus package when he and his administration take office on January 20.
Market participants now look forward to the US economic docket, highlighting the release of the latest consumer inflation figures. The data, along with the broader market risk sentiment and the US bond yields, will influence the USD price dynamics. This, in turn, might assist traders to grab some short-term opportunities around the USD/CAD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD drops below 1.0800 after German Retail Sales data
EUR/USD has come under fresh selling pressure and trades below 1.0800 after the data from Germany showed that Retail Sales declined by 1.9% MoM in February. Resurgent US Dollar demand is adding to the downside in the pair. US data are next in focus.
GBP/USD stays weak near 1.2600 amid market caution
GBP/USD remains defensive near 1.2600 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold price bulls keenly await US PCE Price Index on Friday before placing fresh bets
Gold price (XAU/USD) continues with its struggle to make it through the $2,200 mark on Thursday and oscillates in a narrow trading band through the early part of the European session.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
The other terminal rate: How far will policy rates be cut?
Recent communication by the Federal Reserve and the ECB has made it clear that the first cut in official interest rates is coming. Both central banks are saying the same but the ECB communication is more opaque than that of the Fed.