USD/CAD picks up bids to 1.2930 while losing 0.10% intraday heading into Tuesday’s European session. In doing so, the Loonie pair consolidates the previous day’s gains around the yearly top.
Given the mixed sentiment and the US dollar’s pullback, not to forget firmer prices of Canada’s key export item WTI crude oil, the USD/CAD prices are likely to remain pressured amid a sluggish session.
The US Dollar Index (DXY) stays negative for the second consecutive day, paring Friday’s heavy gains, as market sentiment improves. While portraying the mood, the US 10-year Treasury yields keep the previous day’s bounce off the 16-month-old support line near 1.43% whereas stock futures in the US and Europe print mild gains by the press time.
The year-end positioning and policymakers’ rejections to lockdown, even as Omicron numbers rally, seem to favor the USD/CAD bears. On the same line were the hopes of US stimulus and chatters that the virus woes have limited life.
Elsewhere, the risk-on mood joins the downbeat US dollar to help WTI rise 1.0% around $69.60 at the latest. The black gold dropped to a two-week low before bouncing off $66.15 amid fears of energy demand as the virus variant calls for activity restrictions and challenges the festive demand.
On the contrary, the first Omicron-linked death in the US and warnings from the World Health Organization (WHO), as well as the US Disease Control and Prevention (CDC), challenge the latest risk-on mood. The same joins the Fed rate-hike expectations to keep USD/CAD buyers hopeful.
It’s worth noting that US President Joe Biden’s national address and Canadian Retail Sales for October, expected +1.0% versus -0.6% previous readouts, will be important to watch for immediate direction.
USD/CAD forms a rising wedge bearish chart pattern at the yearly top, with overbought RSI suggesting a pullback. However, a clear break of the 1.2815 level becomes necessary for the bear’s entry. On the contrary, bulls need to cross the 1.2975 hurdle to reject the bearish formation and aim for the 1.3000 psychological magnet.
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