- A goodish pickup in the USD demand, a slump in oil prices provided an intraday lift to USD/CAD.
- Sliding US bond yields curbed the USD strength and kept a lid on any runaway rally for the pair.
- Rebounding oil extended some support to the loonie and led to a sudden drop in the last hour.
The USD/CAD pair trimmed a part of its early gains to the 1.4135-40 region and quickly retreated around 75-80 pips from daily tops.
Having found some support near the key 1.40 psychological mark, the pair managed to regain some positive traction on the first day of a new trading week and was being supported by a combination of factors.
The US dollar was back in demand amid persistent concerns over the economic fallout from the coronavirus pandemic and got an additional boost in the wake of a fresh leg down in the global equity markets.
This coupled with the ongoing downward spiral in crude oil prices, falling to its lowest level since March 1999, undermined demand for the commodity-linked currency – the loonie – and remained supportive.
Meanwhile, the risk-off mood-led slide in the US Treasury bond yields kept a lid on any strong positive move for the greenback and failed to assist the pair to capitalize on its goodish intraday momentum.
The latest leg of a sudden drop during the early North-American session, dragging the pair back towards mid-1.4000s, could further be attributed to a modest recovery in oil prices over the past hour or so.
It will now be interesting to see if the pair is able to attract any fresh buying at lower levels or finally breaks through the 1.40 mark amid absent relevant market-moving economic releases on Monday.
Technical levels to watch