- USD/CAD witnessed some fresh selling on Tuesday and erased a major part of the overnight gains.
- Rebounding oil prices underpinned the loonie and exerted some pressure amid some USD weakness.
- The Fed’s unprecedented measures/news of a deal on the coronavirus package weighed on the buck.
The USD/CAD pair edged lower through the early European session, with bears now looking to extend the downfall further below the 1.4400 round-figure mark.
The pair failed to capitalize on the previous day’s goodish intraday positive move and continued with its struggle to find acceptance/build on its momentum beyond the key 1.4500 psychological mark amid a combination of negative factors.
The US dollar witnessed some aggressive long-unwinding trade in the wake of the Fed latest move on Monday to ease liquidity. The US central bank announced to buy unlimited amounts of Treasury bonds and mortgage-backed securities.
This was followed by reports that the US Senate and the Trump administration were close to reaching a bipartisan agreement on the massive coronavirus spending package, which aggravated the intraday bearish pressure surrounding the greenback.
The pair erased a major part of the overnight gains and was further pressured by some follow-through uptick in crude oil prices, gaining around 5% for the day, which underpinned demand for the commodity-linked currency – the loonie.
However, mounting fears over the economic fallout from the coronavirus pandemic might continue to benefit the greenback’s status as the global reserve currency, which might turn out to be the only factor that might help limit deeper losses.
Hence, it will be prudent to wait for some follow-through selling, possibly below mid-1.4300s, before traders start positioning for an extension of the recent pullback from multi-year tops – levels beyond mid-1.4600s – set last week.
Technical levels to watch
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