During Wednesday's European trading session, the USD/CAD currency pair failed to extend its previous session bullish bias and dropped from the 1.3257, the August 17 high to 1.3215 level mainly due to the cautious mood of the traders ahead of the Bank of Canada's (BOC) monetary policy meeting, which is due to happen at 14:00 GMT. On the contrary, the broad-based U.S. dollar bullish bias, strengthened by the market risk-off sentiment, turned out to be the main factor that caps further downside momentum for the currency pair.
Across the ocean, the reason for the currency pair declining rally could be associated with the fresh upticks in the crude oil prices, which tend to underpin the commodity-linked currency, the loonie, and become the key factors kept the currency pair under pressure. At the moment, the USD/CAD is currently trading at 1.3224 and consolidating in the range between 1.3215 - 1.3260.
The long-lasting disappointment bolstered the risk-off market sentiment over the lack of progress in the much-awaited fiscal package. The U.S. Democratic Party leaders still have differences in package figures. Apart from this, the intensifying US-Chia tussle also kept the market trading sentiment under pressure. President US Trump recently gave the warning while hinting further punitive measures over the Chinese diplomats. He further added that we would take a tough stand against the Dragon Nation" if Trump is re-elected. However, the cautious mood around the equity markets underpinned the safe-haven U.S. dollar.
As per the latest report, the COVID-19 cases continue to rise in India, the U.K., Spain, and some places of the U.S. Whereas, the number of global cases also picking up the pace, reaching 27.5 million as of September 9, as per the Johns Hopkins University data.
As a result, the broad-based U.S. dollar managed to gain its safe-haven bids and extended its previous day bullish trend amid risk-ff market sentiment. Besides supporting the U.S. dollar, prices could be the major selloffs in U.S. stocks. The U.S. markets witnessed a second rout in tech stocks in less than a week, underpinning the U.S. dollar. However, the U.S. dollar gains turned out to be a major factor that caps further downside momentum for the currency pair. Whereas, the U.S. Dollar Index, which tracks the greenback against a bucket of other currencies, rose by 0.07% to 93.502 by 10:01 PM ET (3:01 AM GMT).
At the crude oil front, crude oil prices have started to gains some positive traction during the European session, mainly backed by the record supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.
The market traders will keep their eyes on the Bank of Canada's (BOC) monetary policy meeting scheduled to happen at 14:00 GMT. The risk catalyst like geopolitics and the virus woes, not to forget the Brexit, will also be essential to watch for the fresh direction.
Daily Support and Resistance
Pivot Point 1.319
The USD/CAD is trading with a bullish bias at 1.3249 level, but it has now entered the overbought zone. Technically it should trade bearish below 1.3249 level to complete retracement until 1.3200 and 1.3039 level. The RSI and MACD are holding in the overbought zone, suggesting that bulls are exhausted, and sellers may enter the market very soon. Let's consider taking a sell trade below 1.3249 level to target 1.3142 level ahead of the BOC policy decision. Good luck!