- USD/CAD edged lower on Tuesday and retreated further from 1-1/2-week tops.
- Surging oil prices underpinned the loonie and exerted some downward pressure.
- A subdued USD price action failed to lend any support ahead of US/Canadian data.
The USD/CAD pair edged lower through the early European session and is currently placed near the lower end of its daily trading range, below mid-1.4000s.
The pair came under some selling pressure on Tuesday and retreated further from mid-1.4100s, or 1-1/2 week tops set in the previous session. The downtick was sponsored by a combination of factors, including a further strong recovery in oil prices and a subdued US dollar price action.
Crude oil prices built on its recent strong recovery gains and rallied around 8.5% on Tuesday amid expectations that fuel demand would begin to pick up as governments ease lockdowns. Rallying oil prices provided a goodish lift to the commodity-linked currency – the loonie.
On the other hand, the US dollar failed to capitalize on the previous day’s goodish intraday positive move and remained confined in a narrow trading band. This, in turn, did little to impress bullish traders or ease the intraday bearish pressure surrounding the major.
The pair was last seen hovering around 200-hour SMA, which if broken might prompt some aggressive technical selling and pave the way for an eventual break below the key 1.40 psychological mark. Traders now look forward to the US/Canadian macro data for a fresh impetus.
The Canadian economic docket highlights the release of trade balance data, which will be followed by the release of the US ISM Non-Manufacturing PMI. The data might produce some meaningful trading opportunities later during the early North-American session on Tuesday.
Technical levels to watch