While the US dollar weakens generally, USD/CAD falls even farther from its highest point since January. The temptation to take risks leads to profit-taking in the safe-haven dollar and drags down the major. The Loonie might be hurt by falling oil prices and get support from hawkish Fed predictions.
On the opening day of a new week, there is intense selling pressure on the USD/CAD pair, which is retreating from the level it reached on Friday, its highest since January 6. During the early North American session, the pair stayed in its offered range of 1.3565 to 1.3560, and it showed no reaction to the erratic US macroeconomic data.
According to the US Census Bureau, headline orders for durable goods decreased by 4.5% in January compared to the previous month’s downwardly revised number, indicating a robust 5.1% gain. Orders excluding transportation goods, which increased by 0.7% during the reporting month as opposed to the tiny 0.1% increase predicted and failed to give any momentum, countered the disappointment.
Yet, a rise in global risk sentiment, as shown by a generally upbeat atmosphere in the equities markets, continues to pressure the safe-haven dollar. This is also a significant pressure on the USD/CAD pair. However, several other variables should assist in preventing further declines and merit some caution before preparing for them.
Fears that quickly increasing borrowing rates would stifle economic development and reduce fuel consumption have caused a new supply of crude oil to enter the market. This could undermine the commodity-linked Loonie. In addition, possibilities for the appearance of some USD dip-buying are supported by expectations that the Federal Reserve would maintain its hawkish approach in the aftermath of persistently rising inflation.
The USD/CAD pair confirmed a breakthrough through the 100-day Simple Moving Average (SMA) last week, favoring bullish traders even from a technical standpoint. Additionally, it is wise to hold off on concluding that spot prices have peaked in the short term unless there is substantial follow-through selling due to rumors that the Bank of Canada (BoC) would halt the policy-tightening cycle.
