- USD/CAD drifts into the negative territory for the second consecutive session on Thursday.
- The heavily offered tone surrounding the USD was seen as a key factor exerting pressure.
- An intraday bounce in crude oil prices underpinned the loonie and added to the selling bias.
The USD/CAD pair edged lower during the early North American session and refreshed daily lows, around the 1.3120 region in the last hour.
The pair failed to capitalize on its early uptick, instead met with some fresh supply near the 1.3170 area and retreated further from over three-week tops set in the previous session. The downtick was exclusively sponsored by the emergence of some fresh selling around the US dollar.
The greenback was being weighed down by a strong pickup in the shared currency after the ECB President Christine Lagarde said that there is no need to overreact to euro’s recent gains. This coupled with a strong opening in the US equity markets further undermined the USD’s safe-haven demand.
Even a strong rebound in the US Treasury bond yields failed to impress the USD bulls or lend any support to the USD/CAD pair. Meanwhile, an intraday bounce in crude oil prices provided an additional boost to the commodity-linked loonie and contributed to the pair’s intraday pullback.
Despite the negative move over the past two trading session, the USD/CAD pair has still managed to hold with modest weekly gains. This makes it prudent to wait for some strong follow-through selling before traders start positioning for the resumption of the prior/well-established bearish trend.
Market participants now look forward to a scheduled speech by the BoC Governor Tiff Macklem for some meaningful impetus. Given the muted reaction to Wednesday’s BoC decision, Macklem’s comments might prove to be a non-event for the USD/CAD pair.
Technical levels to watch