USD/CAD slides to fresh session low, retreats farther below 1.3300 handle

Haresh Menghani FXStreet

• The USD witnesses some profit-taking after the recent upsurge to YTD tops.
• A goodish bounce in oil prices underpin Loonie and add to the selling bias.

The USD/CAD pair met with some fresh supply on Tuesday and eroded a major part of the overnight uptick back closer to two-week tops.

The pair continued with its struggle to preserve/build on its momentum beyond the 1.3300 handle, with a combination of negative factors prompting some fresh long-unwinding during the Asian session.

Following the recent rally to the highest level since December, the US Dollar witnessed some profit-taking and shrugged off a follow-through pickup in the US Treasury bond yields amid chances of another US government shutdown.

This coupled with a goodish bounce in oil prices, which tend to underpin demand for the commodity-linked currency - Loonie, further collaborated towards capping gains, rather exerting some fresh downward pressure at higher levels.

In fact, WTI crude oil was up over 0.5% for the day and remained supported by fresh US-China trade optimism, especially after White House senior counsellor Kellyanne Conway said on Monday that the US and China are getting closer to deal.

Meanwhile, voluntary production cuts, led by the Organization of the Petroleum Exporting Countries (OPEC), coupled with the US sanctions on Venezuela and Iran remained supportive of a mildly positive tone around crude oil prices.

It would now be interesting to see if the pair is able to find some buying interest at lower levels or continues drifting lower amid absent relevant market moving economic releases, albeit speeches by several FOMC officials, including the Fed Chair Jerome Powell, might produce some meaningful trading opportunities.

Technical levels to watch

A follow-through weakness below the 1.3265 immediate support is likely to accelerate the slide towards 100-day SMA, around the 1.3220-15 region, en-route the 1.3200 round figure mark. On the flip side, the 1.3300 handle might continue to act as an immediate strong hurdle, above which the pair is likely to aim towards challenging the 1.3355-60 supply zone.

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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