The USD/CAD pair rose for the second session in a row, helped by a number of factors.
The loonie was weakened by falling crude oil prices, which remained supported despite moderate USD strength.
During the early European session, the USD/CAD pair traded with a slight bullish bias, climbing to one-week highs in the mid-1.2300s in the final hour.
On Tuesday, a confluence of variables helped the USD/CAD pair build on the previous day’s gains and gain traction for the second straight session. The commodity-linked loonie’s demand was harmed by a weaker tone surrounding crude oil prices. Aside from that, the major received some further assistance from the US dollar’s moderate gain.
The previous day’s retracement decline from the greatest level since October 2018 was extended, as oil prices remained low amid concerns over the fast-spreading Delta version of COVID-19. Investors appeared to be reducing their optimistic wagers on black gold and becoming more cautious ahead of the OPEC+ meeting later this week.
The dollar, on the other hand, was bolstered by rising expectations that the Fed may tighten its monetary policy sooner rather than later if price pressures continue to worsen. This, combined with an increase in US Treasury bond yields and a general sense of caution in the equities markets, worked as an additional tailwind for the greenback.
Aside from that, some technical buying above the 1.2340 horizontal resistance may be credited with the uptick. However, bullish traders should exercise cautious due to the lack of strong follow-through momentum. Investors may also opt to sit on the sidelines until Friday, when the heavily watched US jobs report is released (NFP).
Meanwhile, traders on Tuesday will be looking for clues from the Conference Board’s US Consumer Confidence Index, which will be released later in the early North American session. The USD may be influenced by this, as well as US bond yields and overall market risk sentiment. Apart from that, the USD/CAD pair will benefit from the current oil price trends.
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