- USD/CAD witnessed a sharp intraday pullback from near two-week tops.
- A subdued USD price action seemed to have prompted some profit-taking.
- The downfall seemed rather unaffected by the ongoing fall in crude prices.
The USD/CAD pair added to its intraday weakness and weakened further below the 1.3600 mark during the early European session.
The pair failed to capitalize on its early uptick to near two-week tops, rather witnessed some long-unwinding trade and has eroded a part of the previous session’s strong rally of over 230 pips. A subdued US dollar demand seemed to be the only factors prompting some profit-taking on the last day of the week, albeit a sharp fall in crude oil prices might help limit deeper losses for the pair.
The overnight USD positive move lacked any strong follow-through amid a solid bounce in the US equity futures. However, the possibility of renewed lockdowns to curb the second wave of coronavirus outbreak seemed to have dampened prospects for a sharp V-shaped economic recovery. This, in turn, should keep a lid on the upbeat market mood and continue underpinning the USD’s safe-haven demand.
Meanwhile, the intraday pullback seemed unaffected by a fresh leg down in crude oil prices, which tend to weigh on the commodity-linked currency – the loonie. Oil prices extended this week’s retracement slide and dropped another 2.5-3.0% on Friday on the back of fading optimism about a swift recovery in demand in the US – the world’s biggest consumer of crude and fuel.
The USD/CAD pair was last seen hovering near the lower end of its daily trading range, around the very important 200-day SMA, and any subsequent slide might still be seen as a buying opportunity.
Market participants now look forward to the release of the preliminary June Michigan Consumer Sentiment Index from the US. The data along with the broader market risk sentiment might influence the USD price dynamics and contribute towards producing some meaningful trading opportunities on the last day of the week.
Technical levels to watch
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