USD/CAD struggles near multi-month lows, below 1.3200 handle

The USD/CAD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range below the 1.3200 handle, closer to multi-month lows.

A combination of diverging forces failed to provide any meaningful impetus to the major and led to a subdued/range-bound price action through the early European session on Tuesday. The US Dollar bearish pressure - led by a more dovish shift by the FOMC last week remained unabated on Tuesday in the wake of a follow-through slide in the US Treasury bond yields.

The negative factor, to some extent, was negated by a mildly weaker tone around Crude Oil prices, which undermined demand for the commodity-linked currency – Loonie. This eventually turned out to be the only factor lending some support and helped limit any further losses, at least for the time being.

Despite the recent escalation of geopolitical tensions in the Middle East, Oil prices fell on Tuesday amid concerns over the outlook for global demand and easing threat for an immediate US-Iran military conflict, especially after the US President Donald Trump announced new sanctions on the latter.

Moving ahead, investors will keep a close watch on fresh trade-related headlines, which tend to influence demand for Oil and other commodities as the focus now shifts to a meeting between Trump and Chinese President Xi Jinping at the sidelines of G-20 meeting later this week.

In the meantime, Tuesday’s economic docket – featuring the release of Canadian wholesale sales data, followed by the Conference Board’s Consumer Confidence Index and new home sales figures from the US, will now be looked upon for some short-term impetus. 

This coupled with speeches by influential FOMC members – including the Fed Chair Jerome Powell, might further contribute towards making it an eventful day for FX traders and produce some meaningful trading opportunities.

Technical levels to watch