- USD/CAD attacks the lower end of the recent trading range above 1.3000.
- US dollar fizzles recovery moves from 10-week low as vaccine hope fades.
- Sino-American tension, EU-US trade tussle also challenge market sentiment.
USD/CAD drops to 1.3000, down 0.10% intraday, as sellers flirt with the intraday low of 1.2998 during the pre-European session trading. In doing so, the pair sellers shrug off recent weakness in the oil prices, Canada’s main export, while highlighting the US dollar’s failure to extend Monday’s run-up.
The US dollar index (DXY) declines to 92.64, losing 0.20% on a day, as risk-tone sours. The greenback gauges marked the heaviest bounce in 12-weeks the previous day as traders cheered Pfizer-BioNTech came out with the 90% effective rate of the coronavirus (COVID-19) Also propelling the vaccine hopes were the comments from the US Health Official Dr. Anthony Fauci who expects Moderna to reach the same league.
However, a halt in the Chinese vaccine trials joins the US sanctions on Beijing’s diplomat over the Hong Kong issue, initially challenged the risk-takers. The cautious sentiment gained additional support from American dislike for the European tariffs of goods worth of $4 billion.
Amid these plays, US stock futures part ways from Monday’s heavy upside whereas US 10-year Treasury yields also lose four basis points (bps) to 0.91% by press time.
Further, WTI prints 0.50% intraday losses while wavering around the $40.00 threshold. The energy benchmark weighs as the covid resurgence weighs on oil demand.
That said, China’s downbeat prints of October month inflation data and US President Donald Trump’s repeated efforts to keep the Republicans in power in the Senate also weigh on the pair.
While the US dollar declines become the major cause of the USD/CAD weakness, bears may cheer the technical breakdown and a shift in the risk sentiment for fresh impetus.
Technical analysis
A clear downside past-200-week EMA and an ascending trend line from May 2018, amid the absence of oversold RSI, favor the USD/CAD bears.
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