USD/CAD struggles below 1.3400 amid WTI weakness, virus woes in Canada

USD/CAD drops to 1.3375 while heading into Tuesday’s European session. The loonie pair recently took a U-turn from the intraday high as the US dollar  |  29/09/2020 06:05
  • USD/CAD slips from intraday high of 1.3384 following the previous day’s downbeat performance.
  • Queback City and Montreal will have fresh lockdown restrictions from October 01.
  • WTI drops amid cautious optimism, fears of demand depletion.
  • US Presidential Election debate, Fedspeak and coronavirus headlines can provide fresh impetus.

USD/CAD drops to 1.3375 while heading into Tuesday’s European session. The loonie pair recently took a U-turn from the intraday high as the US dollar started trimming the early-Asian recovery. Even so, weakness in oil prices, Canada’s biggest export-item, joins the coronavirus (COVID-19) resurgence in Quebec to keep the pair bulls hopeful.

Monday’s sharp increase in the daily virus numbers, with the addition of 750+ new cases, pushed Authorities in Quebec to announce strict activity limits for Quebec City and Montreal. The restrictions will shut down the Bars, casinos, restaurants, Museums and Libraries while also barring the guests at home.

On the other hand, WTI prints a 0.55% intraday loss, currently around $40.45, as China’s inability to meet the Sino-American trade deal targets joins the World Bank’s downbeat economic forecasts, which in turn can lead to a reduction in the global demand.

It should, additionally, be noted that the US dollar index (DXY) refrains from the previous day’s downbeat performance as global markets cheer hopes of further stimulus from American and the European Central Bank (ECB).

Amid all these catalysts, stock futures in the US and Asia-Pacific shares are flashing mild gains while the US 10-year Treasury yields remain lackluster around 0.66% by the time of the press.

Although there are no Canadian details up for publishing today, a slew of Fed speakers and comments from the much-awaited debate in the US will be the key to watch for near-term trade direction.

Technical analysis

FXStreet’s Ross J Burland highlights weekly resistance and daily support while signaling a day trading opportunity. The analyst further says,

This leaves little to no prospect of a high probability and protected set-up in either direction from a swing trading perspective. at least not one that will offer a favorable risk to reward from a 4-hour time frame.

Read: USD/CAD Price Analysis: Day traders are waiting for bearish price action signals

 

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