USD/CAD slides to 1.2600 neighbourhood, closer to weekly lows touched on Tuesday


  • USD/CAD pair witnessed some selling for the third consecutive session on Wednesday.
  • Retreating US bond yields and the risk-on mood kept the USD bulls on the defensive.
  • An uptick in crude oil prices underpinned the loonie and contributed to the selling bias.

The USD/CAD pair edged lower during the early North American session on Wednesday and dropped to the 1.2600 neighbourhood, or weekly lows set on Tuesday.

Following the previous day's good two-way price swings, the pair met with some fresh supply and traded with a negative bias for the third consecutive session. A combination of factors continued benefitting the Canadian dollar, which, along with a subdued US dollar price action, exerted some pressure on the USD/CAD pair through the first half of the trading action.

Statistics Canada reported on Tuesday that the domestic economy grew at a 9.6% annualized pace during the fourth quarter of 2020. Adding to this, a flash estimate showed that the GDP rose 0.5% in January, defying expectations for a contraction at the start of the year. Apart from this, bullish crude oil prices continued underpinning the commodity-linked currency – loonie.

On the other hand, a fresh leg up in the equity markets and a softer tone surrounding the US Treasury bond yields kept the USD bulls on the defensive. This was seen as another factor that prompted some selling around the USD/CAD pair. That said, the upbeat US economic outlook might extend some support to the USD and help limit any further downside for the major.

Investors remain optimistic about a relatively strong US economic recovery from the pandemic amid the progress in COVID-19 vaccinations and a massive US fiscal stimulus plan. Moreover, the reflation trade seemed to have forced investors to price in a possible uptick in inflation and raised doubts that the Fed would retain ultra-low interest rates for a longer period.

It will now be interesting to see if the USD/CAD pair is able to attract any buying at lower levels or breaks below the 1.2600 round-figure mark and resume its prior/well-established bearish trend. Market participants now look forward to the release of the US ADP report on private-sector employment and the US ISM Services PMI for some meaningful trading opportunities.

Technical levels to watch

USD/CAD

Overview
Today last price 1.261
Today Daily Change -0.0011
Today Daily Change % -0.09
Today daily open 1.2621
 
Trends
Daily SMA20 1.2678
Daily SMA50 1.2721
Daily SMA100 1.2871
Daily SMA200 1.3124
 
Levels
Previous Daily High 1.2698
Previous Daily Low 1.26
Previous Weekly High 1.273
Previous Weekly Low 1.2468
Previous Monthly High 1.287
Previous Monthly Low 1.2468
Daily Fibonacci 38.2% 1.2638
Daily Fibonacci 61.8% 1.2661
Daily Pivot Point S1 1.2582
Daily Pivot Point S2 1.2542
Daily Pivot Point S3 1.2484
Daily Pivot Point R1 1.268
Daily Pivot Point R2 1.2738
Daily Pivot Point R3 1.2777

 

 

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