- USD/CAD prolonged its weekly bearish trend and dropped to over three-month lows on Friday.
- Bullish oil prices underpinned the loonie and exerted pressure amid a subdued USD demand.
- Oversold RSI on hourly charts warrants some caution before placing aggressive bearish bets.
The USD/CAD pair remained depressed through the Asian session and was last seen hovering near the lowest level since July 6, just above mid-1.2300s.
Crude oil prices held steady near multi-year tops and remained supported by increasing signs of tight supply over the next few months. This, in turn, continued underpinning the commodity-linked loonie and was seen as a key factor that acted as a headwind for the USD/CAD pair amid a subdued US dollar price action.
Despite Wednesday's slightly stronger US CPI report, the USD witnessed a corrective pullback from 13-month tops as investors still seem unconvinced about a sustained period of inflation. This was reinforced by a sharp decline in the longer-dated US Treasury bond yields, which prompted USD long-unwinding trade.
Moreover, the markets now seem to have fully priced in the prospects for an early policy tightening by the Fed. This, along with the prevalent risk-on mood, held traders from placing fresh bullish bets around the safe-haven greenback. This was seen as another factor that exerted some pressure on the USD/CAD pair.
From a technical perspective, the overnight decline below the 1.2400 mark confirmed a bearish break through the lower boundary of a short-term descending channel. This might have already set the stage for further losses, though oversold RSI on hourly charts warrants some caution before placing aggressive bearish bets.
The market focus now shifts to the release of US monthly Retail Sales figures later during the early North American session. This, along with the US bond yields, will influence the USD and provide some impetus to the USD/CAD pair. Traders will further take cues from oil price dynamics for some short-term opportunities.
Technical levels to watch
|Today last price||1.2362|
|Today Daily Change||-0.0008|
|Today Daily Change %||-0.06|
|Today daily open||1.237|
|Previous Daily High||1.2446|
|Previous Daily Low||1.2355|
|Previous Weekly High||1.2655|
|Previous Weekly Low||1.2452|
|Previous Monthly High||1.2896|
|Previous Monthly Low||1.2494|
|Daily Fibonacci 38.2%||1.239|
|Daily Fibonacci 61.8%||1.2411|
|Daily Pivot Point S1||1.2335|
|Daily Pivot Point S2||1.2299|
|Daily Pivot Point S3||1.2244|
|Daily Pivot Point R1||1.2426|
|Daily Pivot Point R2||1.2481|
|Daily Pivot Point R3||1.2517|
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.