- USD/CAD witnessed some selling for the second straight session on Friday.
- A strong rally in oil prices undermined the loonie and exerted some pressure.
- The USD struggled to preserve its recent gains and added to the selling bias.
The intraday USD selling picked up pace during the early European session and pushed the USD/CAD pair to fresh daily lows, around the 1.4020-15 region. The pair, however, managed to rebound around 20-25 pips from lows and was last seen trading just below mid-1.4000s.
The pair extended the previous session’s turnaround from one-week tops and remained under some selling pressure for the second consecutive session on Friday. The downfall was sponsored by a combination of factors, including some renewed selling around the US dollar and a goodish pickup in crude oil prices.
The greenback struggled to capitalize on the move up that came after the Fed Chair Jerome Powell on Wednesday rejected the idea of negative rates and the US President Donald Trump’s overnight comments. Trump advocated a strong dollar and said that it will help the economy during the recovery post coronavirus crisis.
On the other hand, the commodity-lined loonie was underpinned by a strong rally in oil prices, now up over 3% for the day. Oil is headed for its third week of gains amid the latest optimism over the re-opening of economic in some parts of the world and Saudi Arabia’s commitment to further deepen production cuts in June.
However, fears about the second wave of coronavirus infection and fading hopes for a quick global economic recovery continued weighing on investors’ sentiment. This, in turn, should extend some support to the greenback’s relative safe-haven status and help limit any deeper losses for the major, at least for the time being.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below the key 1.40 psychological mark, before the resumption of the prior depreciating move. A convincing breakthrough the mentioned level will confirm that the USD/CAD pair’s recent bounce from the 1.3900 mark might have already run out of the steam.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of monthly Retail Sales figures for April. The data will influence the USD price dynamics and produce some short-term trading opportunities on the last day of the week.
Technical levels to watch
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