USD/CAD languishes near its lowest level since September 2022, just above mid-1.3100s – Crypto News – Crypto News
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USD/CAD languishes near its lowest level since September 2022, just above mid-1.3100s – Crypto News

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  • USD/CAD drops to its lowest level since September 2022 during the Asian session on Thursday.
  • The overnight rally in Oil prices underpins the Loonie and weighs amid subdued USD price action.
  • Bets on a 25 Fed rate hike in July, economic woes help limit losses for the buck and the majors.

The USD/CAD pair adds to the previous day’s heavy losses and remains depressed for the second successive day on Thursday, hitting its lowest level since September 2022 around mid-1.3100s during the Asian session.

Crude Oil prices consolidate near a two-week high touched on Wednesday and continue to underpin the commodity-linked Looney, The US Dollar (USD), on the other hand, is seen hovering around the monthly low in the wake of overnight less hawkish remarks by Federal Reserve (Fed) Chair Jerome Powell, saying that it may make sense to raise rates at a more moderate pace. This, in turn, exerts some downward pressure on the USD/CAD pair, although a combination of factors helps limit further losses, at least for the time being.

Worries that a global economic downturn, particularly in China, would act as a headwind for crude oil prices, Furthermore, bets for at least a 25 bps Fed rate hike in July hold back traders from placing aggressive bearish bets around the USD and lend support to the USD/CAD pair. Testifying before the House Financial Services Committee, Powell noted that the fight against inflation is still not over and despite the latest pause, officials agreed borrowing costs would likely need to move higher. This reinforced expectations for further tightening by the fed,

Apart from this, a generally weaker tone around the equity markets could benefit the Greenback’s relative safe-haven status. Furthermore, the Relative Strength Index (RSI) on the daily chart is flashing oversold conditions and supports prospects for a modest recovery for the USD/CAD pair. That said, the lack of any meaningful buying suggests that the recent bearish trend witnessed over the past month or so is still far from being over and that the path of least resistance for spot prices is to the downside. This, in turn, warrants caution for bullish traders.

Market participants now look to Powell’s second day of testimony before the Senate Banking Committee. Any signals on monetary policy will influence the USD and provide a fresh impetus to the USD/CAD pair. Traders on Thursday will further take cues from the US economic docket, featuring the release of Weekly Initial Jobless Claims and Existing Home Sales data later during the early North American session. This, along with Oil price dynamics, might further contribute to producing short-term trading opportunities around the major.

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