- USD/CAD witnessed some selling on Friday and was pressured by a combination of factors.
- Bullish oil prices underpinned the loonie and exerted pressure amid a modest USD pullback.
- The downside seems limited as the focus remains on the US/Canadian monthly jobs reports.
The USD/CAD pair finally broke down of its intraday consolidative trading range and refreshed daily lows, around the 1.2785 region during the first half of the European session.
A combination of factors failed to assist the pair to build on the previous day’s positive move, rather prompted some fresh selling on the last trading day of the week. The upside remained capped amid the prevalent bullish sentiment around crude oil prices, which tend to underpin demand for the commodity-linked loonie.
In fact, oil prices climbed to the highest level in a year amid optimism about a strong global economic recovery and fuel demand. The black gold was further supported by the fact that the OPEC+ extended its current oil output policy. This, coupled with a modest US dollar pullback, prompted some selling around the USD/CAD pair.
Following the recent strong positive move to the highest level in more than two months, the greenback witnessed some profit-taking amid a softer tone surrounding the US Treasury bond yields. That said, prospects for a massive US fiscal spending and the incoming positive US macro data should continue to lend some support to the USD.
Apart from this, reluctance to place any aggressive bets ahead of Friday’s release of the US and Canadian monthly employment details might help limit any meaningful slide for the USD/CAD pair. This, in turn, warrants some caution for bearish traders and positioning for any further depreciating move ahead of the key data risk.
Technical levels to watch
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