- USD/CAD failed to capitalize on its intraday move to levels above the 1.3100 mark, or weekly tops.
- A softer tone around oil prices undermined the loonie and remained supportive of the early uptick.
- The emergence of some fresh USD selling was seen as a key factor exerting pressure on the major.
The USD/CAD pair quickly retreated around 35-40 pips from weekly tops and has now dropped to the lower end of its daily trading range, around the 1.3060 region.
The pair prolonged this week’s goodish bounce from multi-month lows and gained some follow-through traction during the first half of the trading action on Thursday. A softer tone around crude oil prices undermined demand for the commodity-linked loonie, which, in turn, was seen as a key factor behind the USD/CAD pair’s intraday uptick.
However, the emergence of some fresh US dollar selling since the early European session kept a lid on any further gains for the USD/CAD pair, rather prompted some fresh selling at higher levels. The continuous surge in new COVID-19 cases in the United States revived hopes for additional fiscal stimulus and exerted some pressure on the buck.
The greenback was further pressured by a steep decline in the US Treasury bond yields and failed to attract any haven flows amid a pullback in the US equity futures. Meanwhile, the USD/CAD struggled to find acceptance above the 1.3100 round-figure mark and the sharp intraday pullback suggests that the recent bearish trajectory might still be far from over.
Market participants now look forward to the US economic docket, highlighting the releases of the latest consumer inflation figures and Initial Weekly Jobless Claims. The data, along with a scheduled speech by the Fed Chair Jerome Powell, will influence the USD price dynamics and produce some meaningful trading opportunities around the USD/CAD pair.
Technical levels to watch
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