USD/CAD: Looks set for further losses towards 1.2500 on WTI recovery, market optimism
- USD/CAD remains pressured around two-week low, drops for the second consecutive day.
- WTI consolidates recent losses even as challenges to the UK’s unlock and vaccine news probe the bulls off-late.
- US dollar drops the most in three weeks as market sentiment improves on upbeat data, vaccine/stimulus hopes.
USD/CAD extends the previous day’s downside while taking offers around 1.2520 during the early initial Asian session trading on Tuesday. The loonie pair dropped the most, despite downbeat oil prices, on Monday as the US dollar sold off due to the risk-on mood.
Tracing the catalysts, the record top of the US ISM Services PMI for March joins the league of the recently strong American fundamental figures, namely the Nonfarm Payrolls (NFP) and ISM Manufacturing PMI, seems to gain the major attention.
Also backing the mood could be the signals of faster covid vaccinations and further stimulus, suggesting early economic recovery.
Meanwhile, the coronavirus (COVID-19) resurgence in India and China joins the fears of oil more oil supply as signaled by the OPEC+, to check the USD/CAD sellers. Additionally, thin market activity, due to Easter Monday, as well as covid fears in Canada seem to have tested the quote’s further weakness.
Amid these plays, the Wall Street benchmarks portrayed a warm welcome to the American traders on Monday but the S&P 500 Futures look for fresh clues, up 0.12% intraday by the press time, to extend the previous day’s run-up to the record top.
Moving on, weekly updates of industry oil inventories and the return of full markets will be the key to follow for fresh impulse.
Technical analysis
Unless crossing a 10-week-old resistance line, currently around 1.2625, USD/CAD is less likely to recall the bulls. Alternatively, the 1.2500 round figure and the latest multi-day low of 1.2365 will b crucial to watch during the quote’s further weakness.