- USD/CAD continued scaling higher through the mid-European session on Monday.
- A sharp fall in crude oil prices undermined the loonie and remained supportive.
- The ongoing slump in the US bond yields seemed to cap any strong USD gains.
The USD/CAD pair jumped to two-week tops, levels beyond the 1.3300 mark in the last hour, albeit quickly retreated few pips thereafter.
Having shown some resilience below the very important 200-day SMA on Friday, the pair caught some fresh bids on the first day of a new trading week and was being supported by a combination of factors.
USD/CAD supported by a combination of factors
Fears that the deadly coronavirus is spreading outside of China and might hurt global growth triggered a fresh wave of the global risk-aversion trade, which was evident from a sea of red across equities.
The global flight to safety turned out to be one of the key factors that provided a strong boost to the US dollar’s perceived safe-haven status and drove the pair higher through the mid-European session on Monday.
Meanwhile, the outbreak concerns weighed heavily on crude oil prices, now down nearly 4% for the day, which undermined demand for the commodity-linked currency – the loonie – and remained supportive.
However, the risk-off mood-led slump in the US Treasury bond yields seemed to keep a lid on any strong follow-through USD buying and might eventually cap gains for the major, at least for the time being.
Hence, it will be prudent to wait for some strong follow-through buying beyond the month swing high resistance near the 1.3330 region before positioning for any further appreciating move.
Technical levels to watch