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  • USD/CAD struggles to make a decisive recovery on Tuesday.
  • Crude oil prices continue to rise following Monday’s rally.
  • US Dollar Index struggles to climb above 93.00.

The USD/CAD pair dropped to its lowest level in nearly two years at 1.2928 on Monday as the surging crude oil prices provided a strong boost to the commodity-sensitive CAD. Although the bearish pressure seems to have eased on Tuesday, the pair struggles to stage a convincing rebound. As of writing, USD/CAD was up only 0.08% on the day at 1.3018.

CAD capitalizes on oil rally

Pfizer’s announcement about its coronavirus vaccine showing more-than-90% effectiveness in phase-three trials revived hopes for a steady recovery in global energy demand and helped crude oil prices post impressive gains. The barrel of West Texas Intermediate rose more than 6% on Monday and is currently up 2% on the day at $40.60.

On the other hand, risk flows allowed US Treasury bond yields to rise sharply at the start of the week and supported the USD. The US Dollar Index (DXY) erased a large portion of last week’s losses on Monday and gained 0.65%. In the absence of significant fundamental drivers, the DXY is staying relatively quiet near 92.80 ahead of the American session.

September JOLTS Job Openings will be the only data featured in the US economic docket in the remainder of the day and crude oil’s performance is likely to continue to impact the pair’s movements in the near-term.

Technical levels to watch for