Search ForexCrunch
  • A sharp fall in the US bond yields weighed on the USD and capped the upside.
  • Weaker oil prices undermined the Loonie and helped limit any deeper losses.

The USD/CAD pair lacked any firm directional bias and oscillated in a narrow trading band, above the 1.3200 handle through the mid-European session on Tuesday.
A combination of diverging factors failed to provide any meaningful impetus or assist the pair to build on the previous session’s attempted recovery move from one-month lows, set on Friday in reaction to upbeat Canadian employment details.

Subdued USD demand offset by weaker Oil

The upside remained capped on the back of a subdued US Dollar demand, which failed to capitalize on the recent optimism over US-China trade negotiations and was being weighed down by a sharp intraday fall in the US Treasury bond yields.
However, a weaker tone around Crude Oil prices, which tend to undermine demand for the commodity-linked currency – Loonie, turned out to be one of the key factors that helped limit any deeper losses, at least for the time being.
Despite a possible escalation of geopolitical tensions in the Middle East, Oil prices added to the previous session’s losses and remained depressed in the wake of demand-side concerns emerging from the US-China trade disputes.
It will now be interesting to see if the pair is able to break out of its daily consolidative trading range or continues with its sideways price action amid absent relevant market-moving economic releases – either from the US or Canada.

Technical levels to watch