USD/CAD advances towards 1.2600 as falling WTI offsets weaker US dollar
- USD/CAD attempts another bounce to recapture 1.2600.
- The spot shrugs off risk-aversion, DXY weakness amid falling WTO prices.
- 1.2525 is the level to beat for the bears if the 200-DMA barrier caps the upside.
USD/CAD is advancing towards 1.2600, snapping last week’s downbeat momentum, unperturbed by the risk-off market mood.
The risk sentiment remains undermined by the rising covid concerns, fresh US-Sino trade tensions and tumbling Chinese stocks amid a tech sector clampdown by Beijing. The risk-off flows have lifted the demand for the US bond while downing the Treasury yields, which in turn, pulls the US dollar lower.
However, the drop in oil prices is likely offsetting the dollar’s decline, keeping USD/CAD afloat near the higher level of the day. WTI price sheds over 1% so far this Monday, as surging covid cases in Asia combined with floods in China threaten the demand growth prospects for oil.
Looking ahead the pair will continue to take cues from the broader market sentiment, as the data docket remains light starting out the Fed week.
USD/CAD: Technical levels
With the latest leg higher, bulls look to recapture the critical 200-Daily Moving Average (DMA), now at 1.2606, above which the 1.2650 psychological resistance will get tested. On the downside, the 5-DMA at 1.2565 could offer immediate support. The bulls will then need to defend the multi-day lows of 1.2525 reached last week.
USD/CAD: Additional levels