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Loonie Caps Greenback’s Bull Run with Support from Crude Oil

Colin First

The USD/CAD pair maintained its positive tone throughout European session but saw its momentum cut short during later half of American market hours. The pair then saw slight downtrend movement but managed to stay above 1.28 price handle. The pair reached as high as 1.29237 during European session as USD gained strength on Tuesday. The Greenback’s increase in Bull Run was influenced because of US 10-year and 2-year bonds yields seeing multi year highs. The 10-year Treasury yield benchmark rose to 3.095% while the 2-year note yield rose to 2.591% respectively.

Prices Continue Consolidation

This caused the greenback to gain momentum against major global currencies on Tuesday’s trading session. The increase in purchase of US dollar can also be viewed as investors choosing to horde the greenback before it reaches new peak to reap better gains as US Fed has promised multiple rate hikes this year which is expected to boost USD to new highs. Investors were also on lookout for US macro data which had mixed outcome yesterday. This resulted to investors to book profit on short term bets resulting in first hurdle for USD’s Bull Run.

USDCAD Hourly

While Loonie saw similar hurdles with re-emerging NAFTA concerns supporting US bulls, the commodity linked currency managed to cap US dollar’s gains as Crude Oil price remains above $70 per barrel providing strong fundamental support to Loonie. Economic Calendar had no major release for Canada yesterday however investors await Manufacturing Production data from Canadian market scheduled to release later today and in US markets investors await building permits and Crude Oil Inventory data. From technical perspective the pair is expected to move around 1.286 to 1.282 price range ahead of American market hours. A move above 1.287 during American session is likely to trigger another attempt at Bull Run in favor of Greenback while a move below 1.282 which seems less likely could result in pair consolidating around 1.27 handle. Expected support and resistance for the pair are at 1.2828 / 1.2813 / 1.2797 and 1.2860 / 1.2874 / 1.2895 respectively.

This article was originally posted on FX Empire

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