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  • The USD remained well supported by positive US bond yields, trade developments.
  • A pickup in oil prices underpinned the loonie and kept a lid on any strong gains.

The USD/CAD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early European session on Monday.

A combination of diverging forces failed to provide any meaningful impetus or assist the pair to build on Friday’s goodish intraday positive move of around 45 pips and led to a subdued/range-bound price action on the first day of a new trading week.

Bulls await a fresh catalyst

The US dollar remained well supported by Friday’s mostly upbeat US economic data and a modest pickup in the US Treasury bond yields. This coupled with some renewed hopes of a possible US-China trade deal extended some support to the major.

In the latest trade-related developments, the US President Donald Trump said on Friday that a deal with China was “potentially very close” and further indicated that he might not sign a bill passed by the Congress that supports Hong Kong.

The positive factor, to a larger extent, was negated by a mildly positive tone surrounding oil prices, which underpinned demand for the commodity-linked currency – loonie and kept a lid on any strong positive move for the major, at least for the time being.

Even from a technical perspective, the pair last week failed near a 5-1/2-month-old descending trend-line resistance, albeit has managed to hold its neck above the very important 200-day SMA, warranting some caution before placing any aggressive directional bets.

Technical levels to watch