- A combination of factors exerted some pressure on USD/CAD for the fifth straight session.
- The prevalent risk-on environment was seen as a key factor weighing on the safe-haven USD.
- A goodish pickup in oil prices underpinned the loonie and contributed to the intraday slide.
The selling bias surrounding the USD dragged the USD/CAD pair to fresh multi-year lows, around the 1.2685 region in the last hour.
The pair prolonged its recent retracement slide from levels just above mid-1.2900s and remained depressed for the fifth consecutive session on Monday. This marked the sixth day of a negative move in the previous seven and was sponsored by a combination of factors – sustained US dollar selling and a strong move up in crude oil prices.
Investors have been betting on a strong global economic recovery in 2021. This, along with the likelihood of additional US financial aid package, remained supportive of the upbeat market mood. Apart from this, speculations that the Fed will keep interest rates lower for a longer period undermined the safe-haven greenback.
Meanwhile, the mass distribution of vaccines helped offset worries about the new faster-spreading coronavirus strain. Adding to this, expectations that OPEC+ may cap output at current levels boosted crude oil prices. This, in turn, benefitted the commodity-linked loonie and exerted some additional pressure on the USD/CAD pair.
The pair was last seen hovering around the 1.2685 region and some follow-through selling will set the stage for the extension of a well-established bearish trend. With technical indicators on the daily chart still far from being in the oversold territory, the USD/CAD pair now seems vulnerable to slide further to test the 1.2600 mark.
Market participants now look forward to the release of final US Manufacturing PMI print for a fresh impetus. Traders might further take cues from the broader risk sentiment, which should continue to play a key role in influencing the USD and produce some short-term opportunities around the USD/CAD pair.
Technical levels to watch
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