- A modest pullback in Crude Oil prices undermined Loonie and helped gain some traction.
- The USD fails to capitalize on the overnight goodish intraday up-move and capped gains.
The USD/CAD pair extended its sideways price action through the early European session on Tuesday and remained well within the previous session’s broader trading range.
After a big bearish gap on Monday, the pair managed to recover a major part of its early fall to the 1.3200 neighbourhood and finally ended the day with only modest losses amid a goodish intraday pickup in the US Dollar demand.
It is worth mentioning that drone attacks on oil fields in Saudi Arabia over the weekend led to a sharp upsurge in Crude Oil prices at the start of a new trading week and underpinned demand for the commodity-linked currency – Loonie.
Retreating Oil prices lend support
With Oil prices paring some of the overnight strong gains, the pair managed to attract some follow-through buying interest on Tuesday, albeit a subdued USD price action failed to inspire the bulls or provide any meaningful impetus.
The USD failed to capitalize on the overnight intraday move up and remained on the defensive in the wake of firming expectations that the Fed will cut rates by another 25 bps at the end of a two-day policy meeting on Wednesday.
In the meantime, absent relevant market-moving economic releases, either from the US or Canada, leave the pair at the mercy of the USD/Oil price dynamics ahead of the crucial FOMC monetary policy meeting starting this Tuesday.
Technical levels to watch
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