- A combination of factors exerted some follow-through selling around USD/CAD on Tuesday.
- The US political uncertainty kept the USD bulls on the defensive and exerted some pressure.
- A sudden pickup in oil prices underpinned the loonie and added to the intraday selling bias.
The USD selling bias picked up pace during the early European session and dragged the USD/CAD pair below the 1.3200 round-figure mark in the last hour.
Following a brief consolidation through the first half of the trading action on Tuesday, the pair met with some fresh supply and added to the previous day’s heavy losses of over 150 pips. The uncertainty US political situation prompted investors to unwind their US dollar bullish bets, which, in turn, was seen as a key factor exerting pressure on the USD/CAD pair.
Despite the fact that the incoming opinion polls have been indicating a strong lead for Democrat challenger Joe Biden over incumbent President Donald Trump, investors refrained from predicting the actual outcome of Tuesday’s US presidential election. Apart from this, the prevalent upbeat market mood further dented the greenback’s relative safe-haven status.
On the other hand, a strong pickup in oil prices – now up over 2% for the day – underpinned demand for the commodity-linked currency – the loonie – and further contributed to the intraday slide. Oil prices got a strong lift on Tuesday and recovered further from multi-month lows touched earlier this week on reports that Russian oil firms may agree to an extension of OPEC+ production cuts.
Meanwhile, the latest leg of a sudden slide over the past hour or so could further be attributed to some technical selling below the 1.3200 round-figure mark. Hence, it remains to be seen if the downfall marks a near-term bearish breakdown or attracts some buying at lower levels amid investors’ reluctance to place aggressive bets heading into the key event risk.
Technical levels to watch
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