The USD/CAD pair seesawed between tepid gains and minor losses, within 30-pips narrow trading band, and is now trading nearly unchanged from yesterday’s closing level.
Currently trading around 1.3025 region, the pair struggled for a firm direction and extended its consolidative price-action near last week’s multi-month lows. The effect of rising crude oil prices, which tends to benefit the commodity-linked currency – Loonies, is being negated by a modest greenback recovery and has kept the pair confined within a narrow trading range.
Investors on Monday sought clarity on how Friday’s mixed jobs report will affect the Federal Reserve’s monetary policy outlook and gave the benefit of doubt to the greenback. In fact, the key US Dollar Index has now recovered back to 100.00 psychological mark, despite of prevailing uncertainty over the US President Donald Trump’s pledged fiscal policies.
Meanwhile, concerns about any extension of new US sanctions on Iran lend support to oil prices, with WTI crude oil trading with some minor gain around $54.00/barrel mark, thus resulting into a range-bound price action around the major.
In absence of any major economic releases, the combination of market sentiment surrounding the greenback and oil price dynamics would continue to be key determinants of the pair’s movement on Monday.
Technical levels to watch
On a sustained break below 1.30 psychological mark, the pair is likely to accelerate the slide towards Jan. monthly lows support near 1.2970 level below which the pair would turn vulnerable to slide further towards 1.2920 horizontal support ahead of 1.2900 round figure mark.
Meanwhile on the upside, 1.3050 area seems to act as immediate resistance, which if cleared might trigger a short-covering rally towards 1.3100 handle, en-route the very important 200-day SMA support break-point, turned strong hurdle, near 1.3125 region.
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