USD/CAD weakens back below 1.3500 mark, touches its lowest since February 21 – by hareshmenghani USDCAD OPEC Inflation Fed Currencies
Bullish Oil prices underpin the Loonie and exert pressure amid a modest intraday USD pullback.Traders now look forward to the US ISM Manufacturing PMI for some short-term opportunities.attracts fresh sellers following a modest intraday bounce to the 1.3535 area on Monday and drops to a fresh low since February 21 during the first half of the European session. The pair is currently placed just below the 1.3500 psychological mark and seems vulnerable below the 100-day Simple Moving Average .
Crude Oil prices opened with a bullish gap on the first day of a new week in reaction to a surprise production cut by OPEC+, which, in turn, underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair. It is worth recalling that major oil producers announced a further output cut of around 1.16 million bpd on Sunday - ahead of a virtual meeting of the OPEC+ ministerial panel - and led to a sharp rise of nearly 6% in the black liquid.
Apart from this, fresh speculations about a further policy tightening by the Federal Reserve should act as a tailwind for the Greenback and help limit the downside for the USD/CAD pair, at least for the time being. Investors now seem convinced that rising energy prices will push inflation higher and force the US central bank to move back to its inflation-fighting rate hikes.
From a technical perspective, acceptance below the 100-day SMA could be seen as a fresh trigger for bears, suggesting the path of least resistance for the USD/CAD pair. This might hold back traders from placing aggressive directional bets ahead of the US ISM Manufacturing PMI, due later during the early North American session.
Investors will further take cues from the monthly Canadian employment details, due for release on Thursday. Apart from this, traders will take cues from Oil price dynamics to determine the next leg of a directional move for the USD/CAD pair.
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