- USD/CAD remains under some selling pressure for the fourth straight day on Tuesday.
- Bullish crude oil prices underpin the Loonie and act as a headwind amid a weaker USD.
- Traders now eye the US macro data for some impetus ahead of the BoC on Wednesday.
The USD/CAD pair edges lower for the fourth successive day on Tuesday and remains depressed through the mid-European session. The pair is currently placed around mid-1.3300s, just a few pips above a one-week low touched on Monday and seems vulnerable to slide further.
Despite a softer risk tone, the safe-haven US Dollar struggles to capitalize on its modest intraday recovery from a nine-month low and acts as a headwind for the USD/CAD pair. Growing acceptance that the Fed will soften its hawkish stance amid signs of easing inflationary pressure turns out to be a key factor that continues to weigh on the greenback.
In fact, the markets have been pricing in a greater chance of a smaller 25 bps Fed rate hike move in February. This, along with softer US Treasury bond yields, keeps the USD bulls on the defensive. Apart from this, the recent rally in crude oil prices to over a one-month top underpins the commodity-linked Loonie and exerts pressure on the USD/CAD pair.
The aforementioned fundamental backdrop favours bearish traders and supports prospects for an extension of the USD/CAD pair's recent downward trajectory. Even from a technical perspective, last week's failure to find acceptance above the 100-day SMA validates the negative outlook and suggests that the path of least resistance for spot prices is to the downside.
Traders, however, seem reluctant to place aggressive bets and prefer to move to the sidelines ahead of this week's key central bank event/data risk. The Bank of Canada is scheduled to announce its policy decision on Wednesday. This will be followed by the Advance Q4 GDP print and the Core PCE Price Index from the US on Thursday and Friday, respectively.
Hence, it will be prudent to wait for some follow-through selling below the monthly low, around the 1.3320 area, before placing fresh bearish bets. Traders now look to the US macro data - the flash PMI prints and the Richmond Manufacturing Index, which might influence the USD. This, along with oil price dynamics should provide some impetus to the USD/CAD pair.
Technical levels to watch
|Today last price||1.3357|
|Today Daily Change||-0.0017|
|Today Daily Change %||-0.13|
|Today daily open||1.3374|
|Previous Daily High||1.3418|
|Previous Daily Low||1.3342|
|Previous Weekly High||1.3521|
|Previous Weekly Low||1.3351|
|Previous Monthly High||1.3705|
|Previous Monthly Low||1.3385|
|Daily Fibonacci 38.2%||1.3371|
|Daily Fibonacci 61.8%||1.3389|
|Daily Pivot Point S1||1.3338|
|Daily Pivot Point S2||1.3302|
|Daily Pivot Point S3||1.3262|
|Daily Pivot Point R1||1.3414|
|Daily Pivot Point R2||1.3453|
|Daily Pivot Point R3||1.3489|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.