- USD/CAD added to the overnight goodish bounce and gained traction for the second straight day.
- A softer tone surrounding oil prices undermined the loonie and remained supportive of the uptick.
- A subdued USD demand held investors from placing bullish bets and kept a lid on any strong gains.
The USD/CAD pair traded with a mild positive bias through the early European session, with bulls now looking to extend the momentum further beyond the 1.3200 mark.
The pair built on the previous day’s goodish bounce of over 40 pips from mid-1.3100s and edged higher for the second consecutive session on Tuesday. The uptick was sponsored by a weaker tone surrounding crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie.
Oil prices slipped for a fourth straight day amid worries about further demand loss due to renewed lockdown measures to contain rising coronavirus cases and the potential for increasing supply. Traders will be watching for crude inventory data from the American Petroleum Institute on Tuesday.
Meanwhile, the uptick lacked any strong bullish conviction on the back of a subdued US dollar demand. The USD bulls refrained from placing any aggressive bets, instead preferred to wait on the sidelines amid fading optimism about additional US fiscal stimulus measures and concerns about the risk of a disputed US election outcome.
Investors remain unconvinced that the legislation will be passed on a wide-ranging coronavirus relief package by the end of a self-imposed Tuesday deadline by the US House Speaker Nancy Pelosi. On the political front, the incumbent President Donald Trump and Democrat challenger Joe Biden are due to face off in a final debate on Thursday.
Market participants now look forward to the US economic docket, featuring the release of Building Permits and Housing Starts. The data, along with the broader market risk sentiment, developments surrounding the US fiscal stimulus and the coronavirus saga, might influence the USD price dynamics and produce some trading opportunities around the USD/CAD pair.
Technical levels to watch
Share
