USD/CAD retreats back to 1.2800 amid rising oil prices/subdued USD demand

USD/CAD struggled to capitalize on its early uptick and was pressured by a combination of factors.
The risk-on mood undermined the safe-haven USD and acted as a headwind amid rising oil prices.
The focus will remain glued to the Russia-Ukraine conflict ahead of the US consumer inflation data.

Haresh Menghani FXStreet

The USD/CAD pair surrendered a major part of its modest intraday gains and was last seen trading just above the 1.2800 mark, up only 0.05% for the day.

The pair attracted some buying during the early part of the trading on Thursday, though a combination of factors held back bulls from placing aggressive bets and capped the upside. A generally positive tone around the equity markets weighed on the safe-haven US dollar. On the other hand, modest rise in crude oil prices underpinned the commodity-linked loonie and acted as a headwind for the USD/CAD pair.

The market sentiment improved drastically amid expectations for a diplomatic solution to end the war in Ukraine. In fact, Russian Foreign Minister Sergey Lavrov and his Ukrainian counterpart Dmytro Kuleba have already arrived in Turkey for ceasefire negotiations. This would be the first talk between the two officials since Russia's invasion of Ukraine and raised hopes for a compromise to resolve the conflict.

The latest development provided much-needed respite to investors and triggered a fresh wave of the global risk-on trade, which, in turn, drove flows way from traditional safe-haven assets. On the other hand, the Candian drew support from a further recovery in crude oil prices from the over one-week low touched the previous day. This was seen as another factor that capped gains for the USD/CAD pair.

That said, the risk of a further escalation in tensions between Russian and Western powers could keep a lid on the optimistic move in the markets. Moreover, worries of a major inflationary shock amid the rapidly deteriorating global economic should extend some support to the greenback and the USD/CAD pair. Hence, the market focus now shifts to Thursday's release of the latest US CPI report.

Apart from this, the incoming headlines surrounding the Russia-Ukraine saga will drive demand for the safe-haven USD and also influence oil price dynamics. This, in turn, should provide some impetus to the USD/CAD pair and allow traders to grab some short-term opportunities.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2809
Today Daily Change	-0.0002
Today Daily Change %	-0.02
Today daily open	1.2811

Trends
Daily SMA20	1.2741
Daily SMA50	1.2686
Daily SMA100	1.2663
Daily SMA200	1.2586

Levels
Previous Daily High	1.2895
Previous Daily Low	1.2804
Previous Weekly High	1.281
Previous Weekly Low	1.2587
Previous Monthly High	1.2878
Previous Monthly Low	1.2636
Daily Fibonacci 38.2%	1.2838
Daily Fibonacci 61.8%	1.286
Daily Pivot Point S1	1.2778
Daily Pivot Point S2	1.2745
Daily Pivot Point S3	1.2687
Daily Pivot Point R1	1.2869
Daily Pivot Point R2	1.2927
Daily Pivot Point R3	1.296

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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