USD/CAD trims a part of early gains, retreats to mid-1.4000s

The USD/CAD pair struggled to capitalize on its intraday positive move beyond the 1.4100 mark and has now retreated around 40 pips from daily tops.

The pair managed to regain some positive traction on the first day of a new trading week and was being supported by a combination of factor – a modest pickup in the US dollar and the ongoing downward spiral in crude oil prices.

The US dollar remained well supported by its status as the global reserve currency amid persistent worries over the economic fallout from the coronavirus pandemic and got an additional boost from a weaker tone around the equity markets.

Meanwhile, oil futures fell to the lowest level since 1999 on the back of concerns over unprecedented demand destruction. This eventually undermined demand for the commodity-linked currency – the loonie – and remained supportive.

Oil prices last traded with a loss of over 5% for the day. However, sliding US Treasury bond yields kept a lid on any strong USD gains and eventually turned out to be one of the key factors behind the pair's pullback from daily tops.

It will now be interesting to see if the pair is able to attract any buying interest at lower levels or extend last week's retracement slide from two-week tops amid absent relevant market-moving economic releases, either from the US or Canada.

Technical levels to watch