- USD/CAD gained some positive traction on Thursday and stalled its recent bearish trend.
- A pullback in crude oil prices undermined the loonie and remained supportive of the uptick.
- Sustained USD selling bias might hold bulls from placing aggressive bets and cap the upside.
The USD/CAD pair traded with a mild positive bias through the early European session and was last seen hovering near daily tops, around the 1.2925-30 region.
The pair managed to find some support ahead of the 1.2900 round-figure mark and for now, seems to have stalled its recent downward trajectory to the lowest level since October 2018. A softer tone surrounding crude oil prices undermined the commodity-linked currency loonie and was seen as a key factor that assisted the USD/CAD pair to gain some positive traction on Thursday.
Oil prices were weighed down by a smaller-than-expected draw in the crude supplies for the week ending November 27 and a deadlock among major oil producers over an extension of production cuts. The OPEC+ is set to resume discussions at the full ministerial meeting, due to take place later this Thursday, on whether the production cuts of 7.7 million barrels per day should be extended.
The supporting factor, to a larger extent, was negated by the prevalent US dollar selling bias, which might hold bulls from placing aggressive bets. The first approval of a COVID-19 vaccine continued undermining the safe-haven US dollar, which was further pressured by the possibility of more US fiscal stimulus measures. This, in turn, could cap any meaningful upside for the USD/CAD pair.
Moving ahead, market participants now look forward to the US economic docket, featuring the releases of Initial Weekly Jobless Claims and ISM Services PMI. The data, along with the broader market risk sentiment, will influence the USD price dynamics and produce some short-term trading opportunities around the USD/CAD pair. The key focus, however, will remain on Friday’s US NFP report.
Technical levels to watch
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