- USD/CAD witnessed some selling on Monday and snapped two successive days of the winning streak.
- A blowout rally in crude oil prices underpinned the loonie and exerted downward pressure on the pair.
- The risk-off mood amid the Russia-Ukraine war benefitted the safe-haven USD and extended support.
The USD/CAD pair slipped below the 1.2700 mark during the early European session, albeit has managed to rebound a few pips from the daily low touched in the last hour.
Following an early uptick to the 1.2755 area, the USD/CAD pair met with a fresh supply on Monday and extended the previous session's late pullback from the vicinity of the 1.2800 round-figure mark. A blowout rally in crude oil prices underpinned the commodity-linked loonie, which, in turn, was seen as a key factor that acted as a headwind for the major.
The markets continued reacting to the worsening situation in Ukraine and increasing Western sanctions on Russia. This, along with a potential ban on Russian crude supplies and delays in Iranian talks, pushed crude oil prices to the highest level since 2008. Apart from this, the closure of Libya's El Feel and Sharara oilfields further boosted the black liquid.
On the other hand, the prevalent risk-off environment continued driving flows towards traditional safe-haven assets and lifted the US dollar to levels not seen since May 2020. The market sentiment remained jittery as Russian forces intensified attacks on Ukraine. Moreover, Russian President Vladimir Putin warned that the war in Ukraine would continue.
Apart from this, Friday's mostly upbeat US monthly employment details further acted as a tailwind for the greenback. This, in turn, assisted the USD/CAD pair to find some support at lower levels, though the attempted recovery lacked any bullish conviction. Nevertheless, the downtick suggests that last week's goodish rebound from sub-1.2600 levels has run out of steam.
In the absence of any major market-moving economic releases, either from the US or Canada, the mixed fundamental backdrop warrants some caution before placing aggressive directional bets. Hence, it will be prudent to wait for some follow-through selling before traders start positioning for any further intraday depreciating move for the USD/CAD pair.
Technical levels to watch
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