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  • USD/CAD edged lower on the first day of a new week amid sustained USD selling bias.
  • The prevalent upbeat market mood continued exerting pressure on the safe-haven USD.
  • Weaker oil prices did little to undermine the loonie or extend any support to the major.

The USD/CAD pair edged lower through the early European session and dropped to fresh daily lows, around 1.2825-30 region in the last hour.

The pair witnessed some fresh selling on the first day of a new trading week and has now reversed a major part of Friday’s intraday bounce of around 65 pips from the 1.2815 region. The downtick marked the second day of a negative move in the previous three and was sponsored by the prevalent selling bias surrounding the US dollar.

News that the US President Donald Trump has signed a $2.3 trillion COVID-19 relief and government funding bill added to the optimism over a last-minute Brexit trade deal. This, in turn, boosted investors’ confidence, which weighed on the greenback’s safe-haven status and was seen as a key factor exerting pressure on the USD/CAD pair.

Meanwhile, the USD bulls largely shrugged off and seemed rather unimpressed by a goodish pickup in the US Treasury bond yields. Even a softer tone around crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie – also did little to lend any support to the USD/CAD pair or stall the intraday slide.

That said, holiday-thinned trading conditions might hold investors from placing any aggressive bets and should help limit the downside for the USD/CAD pair. This makes it prudent to wait for a sustained weakness below the 1.2800 mark before positioning for any further depreciating move amid absent relevant market moving economic releases.

Technical levels to watch