USD/CAD looks for direction, trades below 1.29
After edging higher to a fresh daily high at 1.2933, the USD/CAD pair lost its momentum and retraced its gains in the NA session. As of writing, the pair is trading at 1.2885, up 0.08% on the day.
Crude oil prices are dominating the pair's price action on Monday. As the barrel of West Texas Intermediate dropped to its lowest level since June 28 at $43.66 during the European trading hours, the commodity-sensitive loonie lost strength. Later in the day, crude oil prices started to recover its losses, pushing the barrel of WTI towards the $45 handle and dragging the USD/CAD pair below the 1.29 handle. However, in the last couple of hours oil seemed to have calmed down, allowing the pair to move sideways as well.
On the other hand, the fact that the US Dollar Index remains little changed on the day at 95.83, makes it difficult for the pair to find a direction in the near-term. Moreover, the economic calendar won't be featuring any data in the remainder of the day that could provide a catalyst.
On Thursday, a couple of FOMC members, the board of governors member Lael Brainard and Minneapolis Fed President Neel Kashkari, will be giving their speeches. Until then, crude oil prices could continue to impact the pair's movements.
Technical outlook
The pair is trading dangerously close to the 10-month low that it set on Friday at 1.2858. A break below that level could open the door for further losses towards 1.2820 (Sept. 7 low) and 1.2760 (Aug. 18 low). On the upside, resistances align at 1.2940 (10-DMA), 1.3000 (psychological level) and 1.3085 (20-DMA).
- Risk-reward suggests going long USD/CAD into a big BoC meeting - ING