USD/CAD defends 1.3600 as tepid risk tone buoys US dollar

• USD/CAD benefits from dollar gains and WTI weakness.
• Tepid risk tone will continue to favor the USD bulls.
• CAD traders eye EIA data and broad sentiment for fresh cues.

As the US dollar continues to draw the haven bids from the tepid risk sentiment, USD/CAD keeps its bullish momentum intact above 1.3600.

The spot fades a spike to daily highs of 1.3624, now posting small gains to trade at 1.3609. The continued surge in coronavirus cases globally, with the worsening situation in the US and Australia, boosts the demand for the safe-haven US dollar at the expense of the higher-yielding assets such as stocks, oil, Canadian dollar etc.

Further, the localized lockdowns pour cold water on the narrative of a quicker economic rebound and the optimism over the additional US stimulus talks.

Meanwhile, the Canadian dollar stays on the back foot, mainly due to the renewed weakness in oil prices following a build in the US API crude stockpiles. Also, diminishing odds of a recovery in the oil demand growth this year weighed negatively on the black gold. WTI,  currently, sheds 0.52% to trade below 40.50 levels.  

Looking ahead, the cautious market mood will continue to favor the US dollar bulls, which could limit any pullback in USD/CAD. The focus also remains on the US EIA crude stocks data for fresh oil-price direction, eventually impacting the resource-linked loonie.

USD/CAD technical levels

“Upbeat RSI conditions and MACD adds to the bullish sentiment that signals a break of 1.3625 mark comprising the said resistance line. However, June 26 top near 1.3715 might question the bulls afterward. On the flip side, the 200-day SMA level of 1.3500 holds the key to the pair’s south-run towards 1.3430,” explains FXStreet’s Analyst Anil Panchal notes.

USD/CAD additional levels