USD/CAD struggles near multi-month lows, depressed below mid-1.2300s


  • USD/CAD edged lower on Tuesday and dropped back closer to multi-month lows.
  • A combination of factors weighed on the USD and exerted pressure on the major.
  • The recent run-up in oil underpinned the loonie and contributed to the selling bias.

The USD/CAD pair extended its steady intraday descent through the Asian session and dropped back closer to over three-month lows touched last Friday. The pair was last seen trading just below mid-1.2300s, down over 0.20% for the day.

Having struggled to preserve the overnight recovery gains to levels beyond the 1.2400 mark, the USD/CAD pair met with some fresh supply on Tuesday and was pressured by a combination of factors. The recent strong bullish run in crude oil prices continued underpinning the commodity-linked loonie. This, along with the emergence of fresh selling around the US dollar, exerted some downward pressure on the major.

The markets now seem to have fully priced in the prospects for an imminent Fed taper announcement later this year. Apart from this, Monday's weaker US data – showing that Industrial Production fell by the most in seven months in September – and a modest pullback in the US Treasury bond yields acted as a headwind for the USD. Bulls even shrugged off a softer risk tone, which tends to benefit the safe-haven greenback.

Meanwhile, fears about a faster-than-expected rise in inflation have been fueling speculations about a Fed rate hike move in 2022. This might help limit any deeper USD losses and extend some support to the USD/CAD pair amid slightly oversold conditions on short-term charts. This, in turn, warrants some caution for bearish traders and before positioning for an extension of a near one-month-old downward trajectory.

In the absence of any major market-moving economic releases from the US, traders on Tuesday will take cues from a scheduled speech by Fed Governor Michelle Bowman later during the US session. This, along with the US bond yields and the broader market risk sentiment, might influence the USD. Apart from this, oil price dynamics should provide some impetus to the USD/CAD pair and allow traders to grab some short-term opportunities.

Technical levels to watch

USD/CAD

Overview
Today last price 1.2344
Today Daily Change -0.0036
Today Daily Change % -0.29
Today daily open 1.238
 
Trends
Daily SMA20 1.258
Daily SMA50 1.2614
Daily SMA100 1.2504
Daily SMA200 1.2505
 
Levels
Previous Daily High 1.241
Previous Daily Low 1.2349
Previous Weekly High 1.2498
Previous Weekly Low 1.2337
Previous Monthly High 1.2896
Previous Monthly Low 1.2494
Daily Fibonacci 38.2% 1.2387
Daily Fibonacci 61.8% 1.2372
Daily Pivot Point S1 1.2349
Daily Pivot Point S2 1.2318
Daily Pivot Point S3 1.2288
Daily Pivot Point R1 1.241
Daily Pivot Point R2 1.2441
Daily Pivot Point R3 1.2471

 

 

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