USD/CAD remains depressed below mid-1.3400s, downside potential seems limited

Source Fxstreet
  • USD/CAD trades with a mild negative bias for the third straight day on Monday.
  • The downside, however, seems cushioned amid a pullback in Crude Oil prices.
  • The Fed rate-cut uncertainty might further contribute to limiting the downside.

The USD/CAD pair remains on the defensive for the third successive day on Monday, albeit lacks follow-through selling and manages to hold above last week's swing low, around the 1.3415 region. Moreover, a combination of diverging forces warrants some caution before placing aggressive bearish bets and positioning for an extension of the recent pullback from the vicinity of the monthly peak tested last Thursday.

Houthi rebels stepped up their attacks on vessels in the Red Sea and a drone attack on US forces by radical Iran-backed militant groups killed three soldiers. This raises the risk of a further escalation of tensions in the Middle East and fueled concerns over supply disruption in the region, pushing Crude Oil prices to a nearly two-month high on Monday. The commodity, however, struggles to capitalize on the move as traders opt to take some profits off the table ahead of the OPEC+ meeting on February 1. This, in turn, could undermine the commodity-linked Loonie, which, along with the underlying bullish sentiment surrounding the US Dollar (USD) should lend support to the USD/CAD pair.

Progress towards achieving the Federal Reserve's (Fed) 2% inflation target takes further tightening off the table, though market participants remain uncertain over the timing of the first rate cut. The Personal Income and Spending data released on Friday pointed to strong demand from US consumers. This, along with last week's upbeat US Q4 GDP print, suggested that the economy is still in good shape and should allow the Fed to keep interest rates higher for longer. This, along with geopolitical tensions, assists the safe-haven buck to stand tall near its highest level since December 13 touched earlier this week and might further contribute to limiting any further decline for the USD/CAD pair.

Traders might also refrain from placing aggressive directional bets and prefer to wait for the outcome of the highly-anticipated FOMC monetary policy meeting on Wednesday. Investors this week will also confront the release of important US macro data scheduled at the beginning of a new month, including the closely-watched monthly employment details or the Nonfarm Payrolls (NFP) report on Friday. This will drive the USD demand and provide some meaningful impetus to the USD/CAD pair. In the meantime, Oil price dynamics could allow traders to grab short-term opportunities on Monday in the absence of any relevant market moving economic releases either from the US or Canada.

Technical levels to watch

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Bitcoin falls below $75,000 as the CLARITY Act fails in the Senate — what the vote means for cryptoThe US Senate blocked the Digital Asset Market CLARITY Act in a 49-50 procedural vote, sending Bitcoin briefly below $75,000 — its biggest one-day drop since June. Ethereum fell more than 8%, Coinbase slid 10% and $75 billion of crypto market value evaporated. Here is what the vote was, why it failed, and the levels that matter now.
Author  Suzie
Sep 16, Wed
The US Senate blocked the Digital Asset Market CLARITY Act in a 49-50 procedural vote, sending Bitcoin briefly below $75,000 — its biggest one-day drop since June. Ethereum fell more than 8%, Coinbase slid 10% and $75 billion of crypto market value evaporated. Here is what the vote was, why it failed, and the levels that matter now.
placeholder
Gold ends three-week slide at the $4,400 line — eight straight days of ETF inflows vs a 5% 10-year and a 100 dollarSpot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
Author  Suzie
Sep 20, Sun
Spot gold closed Friday at $4,378.39, up 0.84% on the day and about 0.8% for the week — its first weekly gain in four weeks — with the intraday high of $4,399.67 leaving it 33 cents shy of the $4,400 line. Gold ETFs have now logged eight straight sessions of inflows, but with the 10-year back above 5% and the dollar index near 100, here is what decides whether this is a reversal or a bounce.
placeholder
Bitcoin squeezes back above $80,000 — 110,000 traders liquidated as the hawkish Fed and CLARITY setback fail to hold it down; is $83,000 next?Bitcoin closed above $80,000 on Friday for the first time since September 7, and pushed to $81,299 over the weekend, triggering about $603 million of liquidations — $523 million of them shorts — across more than 110,000 traders. With the Fed's hike already priced and the SEC and CFTC advancing crypto rules after the CLARITY Act failed, here is what stands between BTC and the $83,000 gate.
Author  Suzie
Sep 20, Sun
Bitcoin closed above $80,000 on Friday for the first time since September 7, and pushed to $81,299 over the weekend, triggering about $603 million of liquidations — $523 million of them shorts — across more than 110,000 traders. With the Fed's hike already priced and the SEC and CFTC advancing crypto rules after the CLARITY Act failed, here is what stands between BTC and the $83,000 gate.
placeholder
Bitcoin rallies near $86K on improving markets ahead of quarterly options expiryBitcoin (BTC) market conditions improved over the past week as spot buying pressure strengthened and derivatives positioning increased, pushing the top crypto near $86,000.
Author  FXStreet
11 hours ago
Bitcoin (BTC) market conditions improved over the past week as spot buying pressure strengthened and derivatives positioning increased, pushing the top crypto near $86,000.
placeholder
Bitcoin holds above $86,000 as four of five majors hit 3-month highs — why XRP is the odd one outBitcoin broke above $86,000 for the first time since late January and four of the five largest cryptocurrencies hit three-month highs — but XRP, despite leading the 24-hour gains, is the only one that failed to confirm. Roughly $900 million of leveraged positions were liquidated in 24 hours, with shorts making up 86-90% of the total.
Author  Suzie
6 hours ago
Bitcoin broke above $86,000 for the first time since late January and four of the five largest cryptocurrencies hit three-month highs — but XRP, despite leading the 24-hour gains, is the only one that failed to confirm. Roughly $900 million of leveraged positions were liquidated in 24 hours, with shorts making up 86-90% of the total.
Related Instrument
goTop
quote