The USD/CAD pair was closed at 1.31590 after placing a high of 1.32312 and a low of 1.31515. Overall the movement of the USD/CAD pair remained bearish throughout the day. The USD/CAD pair continued to drop and reached its lowest since late January on Tuesday amid the broad-based US dollar weakness. The pair extended its previous day's losses and witnessed some strong follow-through selling for the second consecutive session on Tuesday.
The heavy tone around the greenback, along with the uncertainty surrounding the next round of US stimulus package coupled with the broad-based weakness in US Treasury bond yields pulled the USD/CAD pair below 1.3200 marks.
The deadlock in Washington DC only worsened the matters as US lawmakers were unable to reach an agreement on a fiscal stimulus bill.
On the data front, at 17:30 GMT, the Building Permits from the US in July rose to 1.50M from the previous 1.26M, also exceeded the expectations of 1.33M, and supported the US dollar. The Housing Starts data also rose to 1.50M from the previous months' 1.22M and the expected 1.23M and gave strength to the US dollar.
On WTI Crude oil front, the black gold suffered on Tuesday and fell to $42.09 because of the fresh risk-off market sentiment backed by the delay in the latest round of US stimulus aid and the geopolitical tensions. The US & China's intensifying tensions after the US blacklisted telecom group of Huawei in the US. The declining oil prices weighed on the commodity-linked Loonie and limited the additional losses in the USD/CAD pair.
There was no macroeconomic data from Canada on Tuesday; hence, the pair's movement remained dependent on the US dollar. However, on Wednesday, the Federal Reserve will publish its monetary policy meeting minutes and traders will keep an eye on them. As the US economic data recently has shown some improvement in a positive term like employment numbers, chances are minutes will also provide some support to the US dollar.
Daily Technical Levels
Pivot point: 1.3223
The USD/CAD has violated the support level of 1.3195 level, and beneath this, the next support is expected to be found near 1.3135 level. The closing of candles below 1.3199 level can lead the commodity currency pair until 1.3129 support. Overall, the pair is trading in a bearish channel. On the 4 hour timeframe, the USD/CAD recent candle is sharply bearish, and in terms of candlestick analysis, it's known as bearish engulfing. It typically helps in the continuation of a bearish trend in the market. Thus, we can expect USD/CAD prices to drop further until 1.3135. Good luck!