USD/CAD trades with modest losses, hold above mid-1.3700s amid softer Oil prices

USD/CAD retreats from the YTD peak, albeit the downside remains cushioned.
Reduced Fed rate cut bets continue to act as a tailwind for the USD and the pair.
Softer Crude Oil prices could undermine the Loonie and help limit the downside.

Haresh Menghani FXStreet

The USD/CAD pair comes under some selling pressure on the first day of a new week and erodes a part of Friday's strong move up to the 1.3785 region, or its highest level since November 14. Spot prices currently trade around the 1.3760-1.3755 zone, though any meaningful corrective decline still seems elusive in the wake of the underlying strong bullish sentiment surrounding the US Dollar (USD).

Investors pushed back their expectations for the first interest rate cut by the Federal Reserve (Fed) to September from June after data released from the US last week pointed to a still-sticky inflation. Moreover, market participants are now pricing in less than two rate cuts in 2024 as compared to three projected by the Fed. This remains supportive of elevated US Treasury bond yields, which allows the USD Index (DXY) to stand tall near the YTD peak and should act as a tailwind for the USD/CAD pair.

Meanwhile, Crude Oil prices struggle to lure buyers despite Iran's attack on Israel over the weekend, which raised the risk of a broader region conflict and could affect Oil supply from the Middle East. This, in turn, could undermine the commodity-linked Loonie and contribute to limiting the downside for the USD/CAD pair. Hence, any subsequent fall might still be seen as a buying opportunity and remain limited, warranting caution before confirming that spot prices have formed a near-term top.

Market participants now look to the US economic docket, featuring the release of monthly Retail Sales and the Empire State Manufacturing Index later during the early North American session. Apart from this, Fedspeak and the broader risk sentiment will drive the USD demand. This, along with Oil price dynamics, should produce short-term trading opportunities around the USD/CAD pair.

USD/CAD

Overview
Today last price	1.3762
Today Daily Change	-0.0009
Today Daily Change %	-0.07
Today daily open	1.3771

Trends
Daily SMA20	1.3582
Daily SMA50	1.3539
Daily SMA100	1.3484
Daily SMA200	1.3514

Levels
Previous Daily High	1.3787
Previous Daily Low	1.3682
Previous Weekly High	1.3787
Previous Weekly Low	1.3547
Previous Monthly High	1.3614
Previous Monthly Low	1.342
Daily Fibonacci 38.2%	1.3747
Daily Fibonacci 61.8%	1.3722
Daily Pivot Point S1	1.3706
Daily Pivot Point S2	1.3642
Daily Pivot Point S3	1.3601
Daily Pivot Point R1	1.3812
Daily Pivot Point R2	1.3852
Daily Pivot Point R3	1.3917

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.