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  • Due to renewed demand for the US dollar, the USD/CAD pair saw multiple buyers near the 100-day moving average on Monday.
  • While Christmas trading was quiet, the US dollar’s gains were limited by a positive risk tone.
  • Investors remained cautious ahead of the OPEC + meeting and major US macroeconomic reports.

For the last time, the USD/CAD price traded just a few pips below the daily high in the area of 1.2680 at the start of the European session.

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On the first trading day of 2022, the pair managed to support the 100-day moving average and gained some positive momentum, breaking the losing streak for three consecutive days. Demand for the US dollar contributed to the spike, which allowed the USD/CAD pair to offset some of Friday’s losses to more than a three-week low.

Emerging markets expect the Fed to raise rates sooner than most other major central banks. In addition, they are betting that the dollar will gain from higher US Treasury bond yields. As a benchmark, the 10-year Treasury yield saw its largest annual increase since 2013, ending in 2021 and exceeding the 1.50% threshold.

As evidenced by the generally positive tone on the equity markets, the underlying bullish sentiment limited the safe-haven dollar’s upside potential. Furthermore, the rise in crude oil prices supported the commodity-linked Canadian dollar and limited significant gains for the USD/CAD pair.

Investors were discouraged from bidding aggressively during a calm holiday trading session before Tuesday’s OPEC+ session. The company plans to increase shipments by 400,000 barrels per day in February. Due to this, the market will continue to be focused on the key US macro data scheduled for the beginning of the month.

This week’s US economic survey releases the ISM-PMI and ADP Private Sector Employment Report, followed by the closely watched Monthly US Employment Report (NFP). Before the next phase of the USD/CAD pair’s direction, traders will also consider the monthly employment data in Canada.

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USD/CAD price technical analysis: Bulls gaining momentum

 

The USD/CAD price continues to gain from 1.2620 and is trading near the 1.2700 handle. The pair has marked a 73% average daily range so far. Meanwhile, recovery attempts may remain capped by congestion of 20-period and 200-period SMAs on the 4-hour chart. Although volume data is favorable for the bulls, the reversal has not been confirmed yet.

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