During the early European session on Wednesday, the USD/CAD pair maintained slight intraday losses, hovering around the 1.3775-1.3770 range. Despite trading above a recent two-week low reached on Tuesday, caution prevails amid uncertainties over a potential extension of this week’s retreat from near the mid-1.3900s, marking a nearly two-year peak.
Crude oil prices displayed a modest rebound, breaking a four-day decline seen since early February. This recovery supported the commodity-linked Canadian Dollar (CAD), contributing to the USD/CAD pair’s three-day downward trend. However, concerns persist over economic slowdowns in the US and China, hindering further gains in oil prices.
Furthermore, increased demand for the US Dollar (USD), bolstered by higher US Treasury bond yields, provided additional support to the USD/CAD pair. Conversely, a positive sentiment in equity markets and expectations of a dovish stance from the Federal Reserve tempered USD strength, potentially limiting significant declines in the pair.
With mixed fundamentals prevailing, traders exercised caution amidst the absence of impactful US economic data on Wednesday. Market participants also awaited Friday’s release of Canada’s monthly employment figures, influencing near-term trading decisions. Short-term opportunities around the USD/CAD pair are anticipated, influenced by USD and oil price dynamics.
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