“¢ The USD builds on Friday’s post-data rebound and seemed to extend some support.
“¢ Bullish oil prices continue to underpin Loonie and capped the attempted recovery.
The USD/CAD pair struggled to register any meaningful recovery and remained within striking distance of near three-month lows set on Friday.
The pair extended its recent bearish trajectory from levels beyond mid-1.3600s and finally broke through the very important 200-day SMA support on Friday amid a strong upsurge in crude oil prices, which tends to underpin demand for the commodity-linked currency – Loonie.
In fact, the barrel of West Texas Intermediate (WTI) held stable near mid-$55.00s, its highest level since November 21, and remained supported by a fall in OPEC output in January to the lowest level in two years and the Baker Huges report that showed a decline in the total number of active oil rigs in the US.
Meanwhile, Friday’s stellar headline NFP print followed by upbeat US ISM manufacturing PMI helped ease the post-FOMC bearish pressure surrounding the US Dollar and turned out to be the only factor that helped limit further downside, at least for the time being.
Currently hovering just a few pips below the 1.3100 handle, the pair seems more likely to extend its sideways consolidative price action amid absent relevant market moving economic releases either from the US or Canada and ahead of this week’s comments by a slew of influential FOMC members.
Technical levels to watch
The 1.3070-65 region might continue to protect the immediate downside, which if broken might accelerate the fall further towards challenging the key 1.30 psychological mark. On the flip side, any attempted recovery might now confront some fresh supply near the 1.3120 region (200-DMA), above which a bout of short-covering could assist the pair to make an attempt towards reclaiming the 1.3200 handle.
Share
