USD/CAD sticks to modest gains above mid-1.2700s, awaits fresh geopolitical developments

USD/CAD continued with its struggle to build on the momentum or find acceptance above 1.2800.
Signs of stability in the markets, sliding US bond yields failed to assist the USD to preserve its gains.
Retreating crude oil prices undermined the loonie and continued lending some support to the pair.

Haresh Menghani FXStreet

The USD/CAD pair retreated nearly 50 pips from the daily high and was last seen trading around the 1.2765-1.2760 region, still up over 0.45% for the day.

The pair opened with a bullish gap on the first day of a new week and gained some positive traction during the early part of trading, albeit struggled to find acceptance above the 1.2800 mark. The initial signs of stability in the financial markets, along with a sharp slide in the US Treasury bond yields failed to assist the safe-haven US dollar to preserve its intraday gains. This, in turn, was seen as a key factor that acted as a tailwind for the USD/CAD pair.

The nervousness over the worsening situation in Ukraine eased after the Russian negotiators said that they are interested to reach an agreement with Ukraine as soon as possible. This was evident from the modest recovery across the global equity markets, which dented demand for traditional safe-haven assets, including the greenback. Apart from this, the diminishing odds of a 50 bps Fed rate hike move in March further held back USD bulls from placing aggressive bets.

The recent geopolitical developments now seem to have dashed hopes for a more aggressive policy response by the Fed to combat stubbornly high inflation. This, along with the global flight to safety, triggered a fresh leg down in the US bond yields and capped the USD. That said, an intraday pullback in crude oil prices undermined the commodity-linked loonie and failed to impress bullish traders, which helped limit any meaningful slide for the USD/CAD pair.

The mixed fundamental backdrop warrants some caution before placing aggressive directional bets as the focus remains on the Ukraine-Russia dialogue, starting today at the Belarusian-Ukrainian border. The incoming headlines will influence the broader market risk sentiment and drive demand for the safe-haven USD. Apart from this, traders will take cues from oil price dynamics for some short-term impetus around the USD/CAD pair amid absent relevant economic releases.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2765
Today Daily Change	0.0065
Today Daily Change %	0.51
Today daily open	1.27

Trends
Daily SMA20	1.272
Daily SMA50	1.2701
Daily SMA100	1.2635
Daily SMA200	1.2559

Levels
Previous Daily High	1.2821
Previous Daily Low	1.2696
Previous Weekly High	1.2878
Previous Weekly Low	1.2682
Previous Monthly High	1.2814
Previous Monthly Low	1.2451
Daily Fibonacci 38.2%	1.2744
Daily Fibonacci 61.8%	1.2773
Daily Pivot Point S1	1.2657
Daily Pivot Point S2	1.2615
Daily Pivot Point S3	1.2533
Daily Pivot Point R1	1.2782
Daily Pivot Point R2	1.2864
Daily Pivot Point R3	1.2906

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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