- The USD remains supported by tempered expectations for an aggressive easing by the Fed.
- The recent pullback in Oil prices undermined Loonie and remained supportive of the move.
- A sustained move beyond mid-1.3100s needed to increase prospects for any further recovery.
The USD/CAD pair continued gaining positive traction for the third consecutive session on Tuesday and climbed to near two-week tops, around the 1.3135-40 region in the last hour.
The pair built on its recent recovery from yearly lows set last Friday and added to the overnight strong up-move back above the 1.3100 round figure mark amid a follow-through pickup in the US Dollar demand, supported by reduced odds for an aggressive monetary easing by the Fed.
Despite the US President Donald Trump’s pressure for immediate rate cuts, the fact that investors have been scaling back expectations of a 50 bps Fed rate cut at the upcoming meeting on July 30-31 underpinned the greenback and remained supportive of the ongoing recovery move.
This coupled with the recent pullback in Crude Oil prices, further weighed down by a vow by the International Energy Agency (IEA) to keep global Oil markets adequately supplied, dented demand for the commodity-linked currency – Loonie and provided an additional boost.
The pair has now moved back closer to the 1.3145-50 supply zone, which if cleared decisively might indicate that a near-term bottom is already in place and thus, pave the way for a further short-covering move amid absent relevant market moving economic releases from the US.
Technical levels to watch
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