USD/CAD sticks to modest intraday gains, lacks follow-through and remains below 1.3300

USD/CAD gains some positive traction on Monday and draws support from a combination of factors.
A downtick in Oil prices undermines the Loonie and acts as a tailwind amid reviving USD demand.
The fundamental backdrop, however, warrants some caution before placing aggressive bullish bets.

Haresh Menghani FXStreet

The USD/CAD pair attracts some buying on the first day of a new week and for now, seems to have stalled its rejection slide from the 50-day Simple Moving Average (SMA), around the 1.3385 area, or a nearly one-month high touched on Friday. Spot prices, however, struggle to capitalize on the modest intraday uptick and remain below the 1.3300 mark through the Asian session.

Crude Oil prices pull back from a five-week high, which, in turn, undermines the commodity-linked Loonie and turns out to be a key factor acting as a tailwind for the USD/CAD pair. The US Dollar (USD), on the other hand, regains some positive traction and reverses a part of Friday's post-NFP downfall to its lowest level since June 22. This lends additional support to the major, though reduced bets for additional rate hikes by the Federal Reserve (Fed), after the one expected in July, keep a lid on any meaningful appreciating move.

The strong US wage growth data and a slight drop in the unemployment rate should allow the Fed to raise interest rates at its upcoming policy meeting on July 25-26. This remains supportive of elevated US Treasury bond yields and helps revive the USD demand. That said, signs that the US labor market conditions were finally easing and that the inflation is gradually slowing, fueled speculations that the Fed will eventually soften its hawkish. This might hold back the USD bulls from placing aggressive bets and cap the USD/CAD pair.

Furthermore, the recent announcement by the world's biggest oil exporters - Saudi Arabia and Russia - to deepen supply cuts in August should limit the downside for Oil prices. Traders also seem reluctant and prefer to wait on the sidelines ahead of this week's release of the latest US consumer inflation figures on Wednesday. This further makes it prudent to wait for strong follow-through buying around the USD/CAD pair before positioning for the resumption of the recent recovery from the 1.3115 area, or the YTD low touched in June.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3284
Today Daily Change	0.0011
Today Daily Change %	0.08
Today daily open	1.3273

Trends
Daily SMA20	1.3244
Daily SMA50	1.3392
Daily SMA100	1.3489
Daily SMA200	1.3503

Levels
Previous Daily High	1.3387
Previous Daily Low	1.3266
Previous Weekly High	1.3387
Previous Weekly Low	1.3203
Previous Monthly High	1.3585
Previous Monthly Low	1.3117
Daily Fibonacci 38.2%	1.3312
Daily Fibonacci 61.8%	1.3341
Daily Pivot Point S1	1.323
Daily Pivot Point S2	1.3188
Daily Pivot Point S3	1.3109
Daily Pivot Point R1	1.3351
Daily Pivot Point R2	1.343
Daily Pivot Point R3	1.3472

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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