- USD/CAD meets with some fresh supply and eroded a part of the overnight positive move.
- A strong rally in oil prices underpinned the loonie and exerted some downward pressure.
- Sliding US bond yields weighed on the USD and further contributed to the intraday slide.
The USD/CAD pair dropped to fresh session lows, around the 1.4080 region in the last hour, albeit quickly recovered around 40-50 pips thereafter.
The pair failed to capitalize on the previous day’s goodish intraday positive move, rather met with some fresh supply on Thursday and was being weighed down by a combination of negative factors.
A sharp leg down in the US Treasury bond yields exerted some pressure on the US dollar and forced the pair to extend the overnight rejection slide from 200-hour SMA resistance near the 1.4270 region.
Adding to this, a strong rally in oil prices – now up over 9% for the day – underpinned the commodity-linked currency – the loonie – and further contributed towards exerting some pressure on the major.
Crude oil prices jumped on Thursday in reaction to the US President Donald Trump’s optimistic comments over a deal between Saudi Arabia and Russia, which will mark the end of the recent price war.
However, mounting fears over an imminent global recession and concerns over a further decline in demand amid COVID-19-related travel restrictions around the world might cap any strong recovery in oil.
This eventually turned out to be one of the key factors that helped limit deeper losses, rather assisted the pair to quickly recover over 50 pips from daily swing lows and move back closer to mid-1.4100s.
It will now be interesting to see if the pair is able to capitalize on the momentum or runs into some fresh supply at higher levels as the focus now shifts to the release of the US initial weekly jobless claims data.
Technical levels to watch