USD/CAD struggles near daily low, around 1.3400 mark amid modest USD weakness

USD/CAD meets with a fresh supply on Tuesday amid the emergence of some USD selling.
China’s COVID-19 woes, hawkish Fed expectations should limit the downside for the buck.
Subdued Crude Oil prices might cap gains for the Loonie and lend some support to the pair.

Haresh Menghani FXStreet

The USD/CAD pair comes under some selling pressure on Tuesday and extends the overnight pullback from the vicinity of the 1.3500 psychological mark. The pair remains on the defensive through the first half of the European session and is currently flirting with the daily low, just below the 1.3400 round-figure mark.

The US Dollar stalls its recent strong recovery move from the lowest level since August 12 and retreats from over a one-week high touched on Monday, which, in turn, acts as a headwind for the USD/CAD pair. A modest downtick in the US Treasury bond yields is weighing on the Greenback. That said, the prevalent cautious mood should help limit any deeper losses for the safe-haven buck and offer some support to the major.

Investors remain worried about the potential economic fallout from a new COVID-19 outbreak in China and the imposition of fresh lockdowns in several cities. Moreover, fears of a further escalation in the Russia-Ukraine conflict take its toll on the risk sentiment. Adding to this, hawkish signals by Fed officials, suggesting that the US central bank is far from pausing its rate-hiking cycle, favour the USD bulls.

Meanwhile, concerns over slowing demand in China - the world's largest Crude Oil importer - should keep a lid on the black liquid. This, in turn, might undermine the commodity-linked Loonie and further help limit the downside for the USD/CAD pair. Traders now look forward to the economic docket, featuring Canadian monthly Retail Sales figures and the Richmond Manufacturing Index from the US, for a fresh trading impetus.

Apart from this, a scheduled speech by Cleveland Fed President Loretta Mester will drive the USD demand. This, along with Oil price dynamics, will further contribute to producing some meaningful trading opportunities around the USD/CAD pair. Nevertheless, the fundamental backdrop supports prospects for the emergence of some buying at lower levels, warranting caution before positioning for any further decline.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3409
Today Daily Change	-0.0044
Today Daily Change %	-0.33
Today daily open	1.3453

Trends
Daily SMA20	1.3482
Daily SMA50	1.3556
Daily SMA100	1.3257
Daily SMA200	1.2998

Levels
Previous Daily High	1.3495
Previous Daily Low	1.3375
Previous Weekly High	1.3409
Previous Weekly Low	1.3226
Previous Monthly High	1.3978
Previous Monthly Low	1.3496
Daily Fibonacci 38.2%	1.3449
Daily Fibonacci 61.8%	1.3421
Daily Pivot Point S1	1.3387
Daily Pivot Point S2	1.3321
Daily Pivot Point S3	1.3267
Daily Pivot Point R1	1.3507
Daily Pivot Point R2	1.3561
Daily Pivot Point R3	1.3627

Author

Haresh Menghani

FXStreet

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

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.