USD/CAD clings to gains near mid-1.4000s, lacks follow-through amid rising oil prices

• USD/CAD regains some positive traction on the back of resurgent USD demand.
• A goodish pickup in oil prices underpinned the loonie and seemed to cap gains.
• Investors on Wednesday will look forward to the release of the FOMC minutes.

The USD/CAD pair held on to its intraday gains, just above mid-1.4000s, albeit lacked any strong follow-through and remained well below daily tops set earlier today.

The US dollar regained positive traction amid renewed concerns over the coronavirus pandemic, especially after the New York state – the centre of the US outbreak – and the United Kingdom announced their highest daily death toll overnight.

Resurgent USD demand eventually assisted the pair to catch some fresh bids on Wednesday and snap two consecutive days of losing streak. The pair recovered over 100 pips from the previous day’s swing low level of 1.3945, or 1-1/2 week lows.

Meanwhile, a goodish pickup in crude oil prices, now up around 3.5% for the day, underpinned demand for the commodity-linked currency – the loonie – and turned out to be one of the key factors that kept a lid on any additional gains, at least for now.

Following the downfall witnessed over the past two trading sessions, oil prices rebounded on Wednesday and the uptick was supported by hopes that OPEC and its allies, including Russia, are likely to agree to cut output amid a deepening global supply glut.

It will now be interesting to see if the pair is able to capitalize on the positive move or meets with some fresh supply at higher levels as the focus now shifts to Wednesday’s important release of the FOMC monetary policy meeting minutes.

Technical levels to watch