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  • USD/CAD came under renewed bearish pressure in American session.
  • US Dollar Index retreats from daily high it hit above 90.50.
  • WTI trades in the negative territory near $52.50.

The USD/CAD pair gained traction in the early trading hours of the American session and rose above 1.2700 but staged a sharp U-turn. As of writing, the pair was trading at its lowest level in a week at 1.2637, losing 0.35% on a daily basis.

Eyes on Powell speech, Biden’s stimulus plan

The USD’s market valuation seems to be the primary driver of USD/CAD’s movements on Thursday. The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, rose to 90.57 after the US Department of Labor reported that Initial Jobless Claims rose by 181,000 to 795,000 last week.

However, with Wall Street’s main indexes starting the day in the positive territory, the USD lost its attractiveness and the DXY turned flat on the day at 90.35, causing USD/CAD to reverse its direction.

Later in the day, FOMC Chairman Jerome Powell will be delivering a speech on the economy and the policy outlook at an online event. Moreover, President-elect Joe Biden is expected to unveil his coronavirus relief plan. Markets have already priced in the reports claiming that the new bill will be worth around $2 trillion. Nevertheless, a positive reaction in the US Treasury bond yields could help the USD gather strength and trigger a rebound in USD/CAD.

In the meantime, the barrel of West Texas Intermediate (WTI) is trading in the negative territory around mid-$52s, helping USD/CAD limit its losses for the time being.

Technical levels to watch for