- USD/CAD remains under heavy selling pressure for the fourth successive day on Monday.
- A further recovery in Oil prices underpins the Loonie and drags the pair to a multi-week low.
- A weaker USD contributes to the fall amid some technical selling below the 200-day SMA.
The USD/CAD pair prolongs its bearish trajectory for the fourth successive day on Monday and dives to over a three-week low, around the 1.3325-1.3320 region heading into the North American session.
Crude Oil prices build on last week's solid rebound from a 17-month low and gain strong follow-through traction for the third straight day amid the optimism over a fuel demand recovery in the wake of easing concerns about an imminent recession. This, along with Friday's upbeat Canadian monthly employment details, underpins the commodity-linked Loonie. Apart from this, a modest US Dollar (USD) weakness contributes to the heavily offered tone surrounding the USD/CAD pair.
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near the monthly low set last week amid growing acceptance for an imminent pause in the Federal Reserve's (Fed) over a year-long rate-hiking cycle. The Fed Fund futures point to a 90% probability that the US central bank will hold interest rates steady in June. Moreover, the markets have also started pricing in the possibility that the Fed beginning cutting rates in the second half of this year.
This, along with worries about a full-blown banking crisis and the US debt ceiling, keeps the USD bulls on the defensive amid a positive risk tone and exerts additional downward pressure on the USD/CAD pair. That said, a goodish intraday pickup in the US Treasury bond yields helps limit deeper losses for the Greenback as traders now look to the latest US consumer inflation figures for a fresh impetus. This, in turn, could lend some support to the major and warrants some caution for bearish traders.
From a technical perspective, Friday's decisive break and close below the very important 200-day Simple Moving Average (SMA) marked a fresh breakdown. This, in turn, supports prospects for a further near-term depreciating move. Hence, any attempted recovery runs the risk of fizzling out rather quickly and is more likely to remain capped, at least for the time being, in the absence of any relevant market-moving economic releases, either from the US or Canada.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD below 1.0400 as mood sours
EUR/USD loses its traction and retreats to the 1.0380 area in the second half of the day on Monday. The negative shift seen in risk mood, as reflected by Wall Street's bearish opening, supports the US Dollar and makes it difficult for the pair to hold its ground.
GBP/USD nears 1.2500 on renewed USD strength
GBP/USD turns south and drops toward 1.2500 after reaching a 10-day-high above 1.2600 earlier in the day. In the absence of high-tier macroeconomic data releases, the US Dollar benefits from the souring risk mood and weighs on the pair.
Gold falls below $2,600 amid mounting risk aversion
Gold fell below the $2,600 level in the American session on Monday, with US Dollar demand backed by the poor performance of global equities and exacerbated by thin trading conditions ahead of New Year's Eve.
Three Fundamentals: Year-end flows, Jobless Claims and ISM Manufacturing PMI stand out Premium
Money managers may adjust their portfolios ahead of the year-end. Weekly US Jobless Claims serve as the first meaningful release in 2025. The ISM Manufacturing PMI provides an initial indication ahead of Nonfarm Payrolls.
Bitcoin misses Santa rally even as on-chain metrics show signs of price recovery
Bitcoin (BTC) price hovers around $97,000 on Friday, erasing most of the gains from earlier this week, as the largest cryptocurrency missed the so-called Santa Claus rally, the increase in prices prior to and immediately following Christmas Day.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.