- 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
|Today last price||1.2344|
|Today Daily Change||-0.0036|
|Today Daily Change %||-0.29|
|Today daily open||1.238|
|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|
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.