- US-China trade concerns benefitted the USD’s safe-haven status.
- Some follow-through weakness in oil prices undermined the loonie.
- Bulls eyeing a move beyond 1.3300 handle ahead of FOMC minutes.
The USD/CAD pair jumped to over one-month tops during the early European session on Wednesday, with bulls now looking to extend the momentum further beyond the 1.3300 handle.
The pair added to the previous session's strong intraday upsurge of nearly 120 pips and continued gaining traction for the second consecutive session on Wednesday. A combination of supporting factors fueled the positive momentum and assisted the pair to finally move past the very important 200-day SMA resistance.
Risk-off mood, weaker oil prices supportive of the positive move
The US President Donald Trump on Tuesday warned of more tariffs if negotiations with China failed and triggered a fresh wave of the global risk-aversion trade. The global flight to safety was seen benefitting the US dollar's perceived safe-haven status against its Canadian counterpart and provided a goodish lift to the major.
Against the backdrop of intensifying US-China trade tensions, a sharp rise in the US inventories led to some follow-through weakness in crude oil prices, which undermined demand for the commodity-linked currency loonie and remained supportive of the pair's ongoing positive momentum to the highest level since October 11.
Adding to this, possibilities of some short-term trading stops being triggered on a sustained move beyond a technically significant moving average (200-DMA) seemed to have further collaborated towards accelerating the momentum through the early European session on Wednesday.
Moving ahead, Wednesday's important release of the latest FOMC monetary policy meeting minutes, due later during the US trading session, will now play a key role in influencing the USD price dynamics and contribute towards producing some meaningful trading opportunities.
Technical levels to watch
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