- USD/CAD finds fresh selling on Tuesday and falls to near four-week lows.
- Weakness in oil prices put pressure on the CAD and provided support for the pair amid a marginal pullback in USD.
- The mixed fundamental background warrants some caution before entering directional positions.
Pair usd/cad Fails to capitalize on modest gains from the previous day and comes under selling pressure on Tuesday. The pair continues to drift during the first half of the European season and fell to a four-week low in the last hour, Although it has shown some resistance below the level around 1.3400,
Initial market reaction quickly faded to further supply cuts by Saudi Arabia and OPEC Continued concern over slow economic growth and weak demand for black gold, This, in turn, pushed crude oil prices lower for the second day in a row, showing a simultaneous Some buying around the US dollar (USD) helped limit intraday losses in the USD/CAD pair, However, expectations that the Federal Reserve (Fed) will keep interest rates unchanged next week limit the USD’s strength.
In fact, current market prices indicate There is an increased likelihood that the US central bank will leave interest rates unchanged at the June policy meeting, Against the backdrop of last week’s dovish rhetoric from several FOMC officials, Monday’s dismal release of the US ISM Services PMI, which fell to 50.3 in May, reaffirmed market expectations. An impending pause in the Fed rate hike cycle, This is keeping US Treasury yields under pressure, which could dampen bullish expectations and cap the USD/CAD pair.
however, Prevailing caution in markets may provide some support to safe-haven USD and the USD/CAD pair. In the absence of major US economic releases, the mixed fundamental background makes it prudent to wait for selling before positioning for any further depreciation moves. Market participants are now turning their attention to the Canadian PMI release, which together with oil price dynamics could impact the Canadian Dollar (CAD) and provide some momentum for the pair.