“¢ Bullish crude oil prices underpin Loonie and exert some fresh downward pressure.
“¢ Subdued USD demand also does little to lend any support and ease the bearish bias.
The USD/CAD pair retreated around 40-pips from Asian session high level of 1.3208 and is currently placed at the lower end of its daily trading range.
For the second consecutive session, the pair struggled to sustain/build on its momentum beyond the 1.3200 handle and was being weighed down by the prevalent strong bullish sentiment around crude oil price.
In fact, WTI crude oil continued with its recent upsurge and touched its highest level since Nov. 2014 amid reports that Libya declared force majeure on significant amounts of its supply.
This along with firming prospects for a BoC rate hike in July underpinned the commodity-linked currency – Loonie and was seen as one of the key factors capping any meaningful up-move for the major.
Meanwhile, a subdued US Dollar price action, possibly led by flattening of the US yield curve, also did little to provide any bullish impetus and further collaborated to the pair’s weaker tone through the early European session on Tuesday.
There isn’t any major market-moving economic data due for release on Tuesday, either from the US or Canada, and hence, investors look forward to this week’s heavyweight macro data, including the keenly watched NFP, before positioning for the pair’s next leg of directional move.
Technical levels to watch
Immediate support is pegged near the 1.3135 area, below which the pair is likely to accelerate the fall towards the 1.3100 handle before eventually dropping to its next support near the 1.3065-60 region.
On the flip side, the 1.3200-1.3210 region now seems to have emerged as an immediate hurdle, which if cleared might trigger a short-covering bounce towards 1.3265-70 supply zone ahead of the 1.3300 handle.
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