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USD/CAD fades bounce off three-week low amid sluggish markets.
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US Dollar struggles to defend recent gains, Oil price remains sidelined.
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Mixed sentiment about US debt-ceiling accord, banking turmoil prod Loonie pair traders.
USD/CAD renewed an intraday low near 1.3365 as it failed to defend the early week rebound amid sluggish markets early on Tuesday. Adding strength to the loonie’s pullback move could be the dollar’s struggle to protect earlier gains amid a cautious mood ahead of key US debt-ceiling talks at the White House. It’s worth noting that WTI crude oil, Canada’s main export, is also quoted softly bidding to tempt bears.
That said, the US dollar index (DXY) retreated to 101.42 as it consolidated intraday gains amid overwhelming data from the Federal Reserve’s (Fed) quarterly bank loan survey. Nevertheless, US inflation expectations for each 10-year and 5-year breakeven inflation rate from the St. Louis Federal Reserve (FRED) data, adding to fears of a depressed greenback if the US fails to put a floor on raising the debt ceiling.
WTI crude oil held on to modest gains near $73.00, a fourth straight day, as fears of a slowdown as major Asian countries opened international borders capped cautious optimism. Moreover, easing fears of a bank crisis and the inability of the US dollar to regain upside traction also pushed oil prices higher.
Among those plays, S&P 500 futures remained indecisive near 4,150 while US Treasury bond yields snapped a three-day winning streak.
Moving forward, a light calendar and cautious mood could limit USD/CAD moves ahead of top-level data/events. That said, today’s White House discussion on changing the debt ceiling deadline, currently close to June, will be important in determining short-term market movements. Given the wide divergence among US policymakers on this issue, potential indecision and burden on the US dollar cannot be ruled out. However, Wednesday’s prospective US inflation numbers for April could protect loonie buyers, unless dovish Fed concerns weigh on the quote and other things remain the same.
Technical analysis
Despite the latest retreat in the USD/CAD prices, Monday’s bullish candlestick formation and a corrective bounce off an upward-sloping support line from November 2022 keep the buyers hopeful.
Also read: USD/CAD Price Analysis: Justifies Dragonfly Doji candlestick to bounce off key support line towards 1.3400
ADDITIONAL IMPORTANT LEVELS
