- A modest USD pullback from multi-month tops prompted some selling around USD/CAD.
- Intraday slide in crude oil prices undermined the loonie and helped limit any further losses.
- Investors now look forward to US/Canadian macro releases for some trading opportunities.
The USD/CAD pair edged lower through the first half of the European session and refreshed daily lows in the last hour, albeit recovered few pips thereafter. The pair was last seen hovering around the 1.2600 mark, down 0.25% for the day.
The pair witnessed some selling on Wednesday and eroded a major part of the previous day’s positive move to nearly three-week tops. This marked the first day of a negative move in the previous three and was sponsored by a modest US dollar pullback from four-month tops.
The yield on the benchmark 10-year US government bond struggled to capitalize on the overnight spike to the highest level since January 2020. This, in turn, seemed to be the only factor that prompted the USD bulls to take some profits off the table following the recent runup.
Meanwhile, the USD/CAD pair slipped back below the 1.2600 mark, though a combination of factors helped limit any further intraday losses. An intraday slide in crude oil prices acted as a tailwind for the commodity-linked loonie and extend some support to the major.
Apart from this, the optimistic outlook for the US economy, along with the prevalent cautious mood around the equity markets should underpin the safe-haven greenback. This, in turn, warrants some caution for bearish traders and before positioning for any further downfall.
Market participants now look forward to Wednesday’s US economic docket, featuring the release of the ADP report on private-sector employment, Chicago PMI and Pending Home Sales data. From Canada, the monthly GDP report might also provide some impetus to the USD/CAD pair.
Technical levels to watch
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