USD/CAD testing the 1.3305 area again, after hitting a fresh low near 1.3265

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  • USD/CAD post modest gains on Wednesday remains in recent range. 
  • Dollar supported by modestly higher yields. 
  • US data: new home sales rise above expectations in January. 

The USD/CAD pair is trading back at the 1.3300 area after hitting a fresh daily low at 1.3271. Overall, the pair continues to trade sideways, unable to make a run beyond 1.3305. The improvement in risk sentiment and higher crude oil prices limited the upside on Wednesday. 

Equity prices in Wall Street are recovering. The Dow Jones lost nearly 900 points yesterday and today gains 1.30%. Investors appear to see an opportunity after the sharp decline in prices. The key driver continues to be the spread of the coronavirus. The list of countries with infected patients rose further. 

US bond yields bounce to the upside. The 10-year US Treasury yield dropped on Tuesday to a record low and currently stand at 1.34%. The move in the bond market offered support to the greenback. The DXY is rising on Wednesday after falling during three consecutive days. Data from the US came in better-than-expected. New Home Sales rose 7.9% in January to an annual rate of 764K, above the 710K of market consensus. 

Crude oil prices erased losses over the last hours, with the WTI barrel rising back to the $50 area from one-year lows. The move pushed USD/CAD to 1.3270 but the momentum in the Loonie did not last and the pair rose back to the 1.3305 area. 

From a technical perspective, the USD/CAD is trading sideways in the range between 1.3305 and 1.3265. A consolidation above 1.3310 would likely clear the way to more gains, targeting the February high at 1.3328. On the flip side, below 1.3265 the next support stands at 1.3240.

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