- USD/CAD continued gaining traction for the second straight session on Tuesday.
- The USD remained well supported by the coronavirus crisis and the risk-off mood.
- The ongoing slump in oil prices undermined the loonie and remained supportive.
The USD/CAD pair jumped to near three-week tops, around the 1.4265 region in the last hour, albeit quickly retreated few pips thereafter.
A combination of supporting factors assisted the pair to build on the overnight positive move and continue gaining traction for the second consecutive session on Tuesday. The momentum lifted the pair beyond last week’s swing high, around the 1.4180-85 region, and took along some short-term trading stops near the 1.4200 round-figure mark.
The US dollar remained in demand amid persistent worries over the economic fallout from the coronavirus pandemic and was further underpinned by the prevailing risk-off mood. Adding to this, reports about the health of North Korean leader Kim Jong Un provided an additional boost to the USD’s status as the global reserve currency.
This comes on the back of concerns over the meltdown in crude oil prices, amid a glut caused by the coronavirus lockdown, which weighed heavily on the commodity-linked currency – the loonie – and remained supportive of the pair’s move back closer to monthly tops.
However, a sharp intraday bounce in oil prices, recovering around 20% from daily lows, kept a lid on any further gains, instead led to a modest pullback of around 50 pips from daily tops. Despite the pullback, the pair has managed to hold above the 1.4200 round-figure mark and seemed rather unaffected by Tuesday’s slightly better Canadian macro data.
The Canadian monthly retail sales came in to show a modest 0.3% growth in February as compared to 0.2% expected and 0.4% previous. However, the figures pertain to a period before the coronavirus crisis and hence, did little to impress traders or provide any meaningful impetus to the major.
Technical levels to watch