USD/CAD struggles below 1.2300 amid upbeat market sentiment, firmer WTI

USD/CAD eases from an intraday high of 1.2281 to 1.2277, keeping the short-term trading range, amid the initial Asian session trading on Tuesday. In doing so, the Loonie pair struggles for a clear direction near the lowest levels since early 2018.

The quote stayed near the multi-day low, printing mild intraday losses, amid broad US dollar weakness and upbeat prices of Canada’s key export item, namely WTI oil.

The US dollar index (DXY) took a U-turn from a one-week top to print daily losses on Monday as the market’s mood turned positive, dimming the safe-haven demand of the greenback. Behind the optimism were comments from US Federal Reserve Chairman (Fed) Jerome Powell and New York Fed President John Williams.

It should be noted that ongoing US-Iran jitters and tussles between Saudi Arabia and Tehran helped oil, in addition to the strong risk appetite, which in turn favored the USD/CAD prices. Furthermore, headlines suggesting vaccinations for Americans in the 12-15 years age group offered additional support to the risk-on mood.

Even so, weaker than expected Canadian Markit Manufacturing PMI battled the US ISM Manufacturing to test the pair sellers. Also on the negative side were chatters surrounding the West versus China story.

Amid these plays, S&P 500 Futures waver around 4,182 after Wall Street’s mixed closing and downbeat US Treasury yields.

Looking forward, Canada’s Building Permits and trade numbers for March, coupled with the US Factory Orders for the said month, will be the key for USD/CAD traders. However, the headlines concerning the coronavirus (COVID-19) and other risks shouldn’t be ignored as well.

Technical analysis

Contrasting candlestick formations near the multi-day lows require USD/CAD traders to wait for a clear break of 1.2265–2325 area before taking any fresh entries.