USD/CAD consolidated in a range near 6-week tops, comfortably above 1.3300 mark

• USD/CAD remained confined in a range and consolidated the overnight strong positive move.
• A subdued USD price action held bulls from placing fresh bets ahead of Powell’s testimony.
• A softer tone surrounding oil prices undermined the loonie and helped limit the downside.

The USD/CAD pair was seen oscillating in a range above the 1.3300 mark through the Asian session and consolidated the previous day’s strong positive move to six-week tops.

Rising odds of fresh lockdown measures to curb the second wave of coronavirus outbreak triggered a selloff in the global equity markets. The anti-risk flow provided a strong boost to the US dollar’s status as the reserve currency. Apart from this, a steep fall in crude oil prices undermined the commodity-linked currency – the loonie – and further contributed to the USD/CAD pair’s momentum on the first day of a new trading week.

However, expectations that the Fed Chair Jerome Powell will reiterate to keep interest rates lower for longer during his congressional testimony later held the USD bulls from placing fresh bets. This, in turn, led to a subdued/range-bound price action through the first half of the trading action on Tuesday. Meanwhile, a softer tone surrounding crude oil prices continued lending some support to the USD/CAD pair and helped limit the downside.

Market participants now look forward to the US economic docket, featuring the releases of Existing Home Sales and Richmond Manufacturing Index. The data might influence the USD price dynamics and produce some short-term trading opportunities during the early North American session. The key focus, however, will be on Powell’s testimony, which will play a key role in driving the near-term sentiment surrounding the greenback.

Technical levels to watch