- USD/CAD witnessed a modest pullback from one-week tops set earlier this Wednesday.
- Stability in the equity markets weighed on the safe-haven USD and exerted some pressure.
- Weaker oil prices could undermine the loonie and help limit deeper losses, at least for now.
The USD/CAD pair extended its intraday pullback from one-week tops and slipped back below the 1.3300 mark during the early European session.
The pair failed to capitalize on its early uptick beyond 200-hour SMA, instead met with some fresh supply near the 1.3340 region and has now eroded a part of the previous day’s positive move. Signs of stability in the equity markets weighed on the safe-haven US dollar, which, in turn, was seen as a key factor exerting pressure on the USD/CAD pair.
It is worth reporting that the US President Donald Trump’s abrupt decision on Tuesday to cancel talks with Democrats on economic stimulus package triggered a steep decline in the US equity markets. Trump’s surprise decision fueled concerns about the already shaky US economic recovery and forced investors to dump assets perceived as riskier.
Meanwhile, a weaker tone surrounding crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie – failed to lend any support to the USD/CAD pair, albeit might help limit any deeper losses. This makes it prudent to wait for some strong follow-through selling before positioning for any further depreciating move.
Market participants now look forward to Wednesday’s important release of the latest FOMC monetary policy meeting minutes. This, along with the broader market risk sentiment, will influence the USD price dynamics and produce some meaningful trading opportunities around the USD/CAD pair.