USD/CAD stays in the positive territory despite USD weakness

DXY pushes lower toward 93 on Monday.
WTI struggles to recover last week's losses.

Eren Sengezer FXStreet

The USD/CAD pair, which was able to end the previous week higher following Friday's sharp upsurge, is having a difficult time setting its next short-term direction on Monday. As of writing, the pair was trading at 1.2872, adding 0.05% on the day.

Today's data from Canada showed that foreign investment in Canadian securities rose to $20.8 billion in October from $16.69 billion in September. Moreover, "Canadian investors increased their holdings of foreign securities by $16.5 billion, mainly purchases of US shares," the Statistics Canada announced. However, the market reaction to the data was non-existent and it couldn't force the pair out of its 40-pip daily trading channel.

On the other hand, the US Dollar Index started the week on a negative note as investors are waiting for clarity on whether or not the tax bill in the U.S. is going to be legalized before the end of the year. Although the Congress is expected to pass the tax code overhaul later this week according to comments from some top U.S. Republicans on Sunday, markets prefer to stay in a wait-and-see mode.

Meanwhile, the commodity-sensitive loonie is having a difficult time finding demand as crude oil prices fail to stick to its recovery gains on Monday. As of writing, the barrel of West Texas Intermediate was trading near $57.30, virtually unchanged on the day.

Technical outlook

The initial support for the pair aligns at 1.2840 (200-DMA) ahead of 1.2775 (50-DMA) and 1.2700 (psychological level). On the upside, resistances could be seen at 1.2880 (daily high), 1.2915 (Oct. 31 high) and 1.3000 (psychological level). On the daily chart, the RSI indicator continues to float above the 50 mark, suggesting that the buyers are still in control of the price action.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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