USD/CAD stages a modest recovery from multi-week low, upside potential seems limited

USD/CAD gains some positive traction amid a goodish pickup in the USD demand.
The Fed’s less hawkish stance and the risk-on mood act as a headwind for the USD.
Bullish Oil prices could underpin the Loonie and contribute to capping the major.

Haresh Menghani FXStreet

The USD/CAD pair attracts some buying near the 1.3585 region, or over a three-week low touched this Wednesday and sticks to its modest gains through the early European session. The pair is currently placed just above the 1.3600 round-figure mark and for now, seems to have snapped a two-day losing streak, though lacks bullish conviction.

The US Dollar regains positive traction and recovers a major part of the overnight losses, which, in turn, is seen as a key factor lending some support to the USD/CAD pair. That said, the Federal Reserve's less hawkish stance, along with the prevalent risk-on environment, might hold back traders from placing aggressive bullish bets around the safe-haven USD and act as a headwind for the major, at least for the time being.

It is worth recalling that the US central bank last week toned down its approach to reining in inflation and signalled that a pause to interest rate hikes was on the horizon in the wake of the recent turmoil in the banking sector. Adding to this, the takeover of Silicon Valley Bank by First Citizens Bank & Trust Company calmed market nerves about the contagion risk and helped reverse the negative sentiment in the markets.

Apart from this, bullish Crude Oil prices could underpin the commodity-linked Loonie and contribute to capping any further gains for the USD/CAD pair. Against the backdrop of hopes of a strong demand recovery in China, a halt to some exports from Iraq's Kurdistan raised concerns about tightening global supplies. This, along with easing fears of a full-blown banking crisis, pushes the black liquid to over a two-week high.

This, in turn, makes it prudent to wait for strong follow-through buying before confirming that the USD/CAD pair's rejection slide from levels just above the 1.3800 mark has run its course and placing fresh bullish bets. Traders now look to the US economic docket, featuring the release of Pending Home Sales. The data might influence the USD, which, along with Oil price dynamics could provide some impetus to the major.

The focus, however, will remain on the final US Q4 GDP on Thursday, followed by the monthly Canadian GDP report and the Core PCE Price Index - the Fed's preferred inflation gauge - on Friday.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3611
Today Daily Change	0.0010
Today Daily Change %	0.07
Today daily open	1.3601

Trends
Daily SMA20	1.3704
Daily SMA50	1.3538
Daily SMA100	1.3517
Daily SMA200	1.3366

Levels
Previous Daily High	1.3695
Previous Daily Low	1.3592
Previous Weekly High	1.3804
Previous Weekly Low	1.3631
Previous Monthly High	1.3666
Previous Monthly Low	1.3262
Daily Fibonacci 38.2%	1.3631
Daily Fibonacci 61.8%	1.3656
Daily Pivot Point S1	1.3564
Daily Pivot Point S2	1.3526
Daily Pivot Point S3	1.346
Daily Pivot Point R1	1.3667
Daily Pivot Point R2	1.3733
Daily Pivot Point R3	1.377

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

AUD/USD remains confined in a range above 0.7100

AUD/USD extends its consolidative price move above 0.7100 through the Asian session on Tuesday, shrugging off hawkish comments from RBA Assistant Governor Sarah Hunter as traders keenly await the crucial Trump-Xi summit later this week. Meanwhile, escalating tensions in the Middle East and the Fed's hawkish outlook remain supportive of the bullish US Dollar undertone, capping spot prices.

USD/JPY bulls seem cautious below 157.50 as JPY intervention risks loom

USD/JPY consolidates below mid-157.00s during the Asian session on Tuesday as intervention fears help limit losses for the Japanese Yen. However, the BoJ's dovish rate hike to a 31-year high keeps JPY bulls on the back foot. At the same time, the US Dollar retains its bullish undertone amid the Fed's hawkish outlook and escalating Middle East tensions, acting as a tailwind for the pair.

Gold benefits from falling US bond yields; remains below $4,400 amid bullish USD

Gold regains positive traction during the Asian session on Tuesday, though it lacks bullish conviction and remains below $4,400. Falling oil prices ease inflation fears, dragging US bond yields lower and supporting the non-yielding yellow metal. Meanwhile, the Fed's hawkish stance, along with escalating Middle East tensions, keeps the US Dollar near its highest level since late July and acts as a headwind for the bullion.

Ethereum rallies above $2,700 as investors shrug off bearish sentiment

Ethereum (ETH) climbed above $2,700 on Monday after investors defended the realized price level despite negative sentiment over the Clarity Act's failure and the Federal Reserve rate hike. After the Clarity Act failed to advance in the Senate, ETH dipped below $2,400 last week. But right below that price is the top altcoin's realized price, or average on-chain cost basis, at $2,310.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.