Today in the European trading session, the USD/CAD currency pair flashed red and hit the intra-day low below mid-1.3600 level due to the broad-based US dollar subdued action despite the pickup in the US Treasury bond yields. As well as, the reason for the losses in the pair could also be attributed to the sharp upticks in the crude oil prices, which underpinned the commodity-linked currency the Loonie and contributed to the currency pair declines.
However, the worries over the resurgence of the Covid-19 virus exerted downside pressure on the risk sentiment. As per the latest report, the US coronavirus cases increased by more than 40,000 on Tuesday in key states, such as Florida and California, which gradually overshadowed the prospects for a sharp V-shaped global economic recovery and provided support to the safe-haven currencies like Japanese yen.
Despite this, the broad-based US dollar failed to maintain its early Asian session's gains and dropped at least for now. Even a strong intraday pickup in the US Treasury bond yields was unable to strengthen the greenback demand. However, the subdued sentiment in the US dollar turned out to be one of the key factors that kept the currency pair lower.
At the crude oil front, WTI crude oil prices increased around 2.5% on the day backed by the overnight report, which showed crude inventories in the US dropped much more than expected. The data indicated an improvement in demand despite the increased number of appearing coronavirus cases from across the world. The WTI crude oil prices were further supported by a drop in output in June from OPEC to the lowest level in two decades.
As in result, the upticks in the crude oil prices underpinned the commodity-linked currency the Loonie and exerted some downside press on the currency pair.
Looking forward, the market traders will keep their eyes on the US economic docket, which will show the release of the ADP report on private-sector employment and ISM Manufacturing PMI. As well as, the minutes of the latest FOMC monetary policy meeting will influence the USD price dynamics and produce some short-term trading opportunities later this Wednesday.
Daily Support and Resistance
Pivot Point 1.3677
Technically, the AUD/USD pair is operating in oversold territory at 1.3545 marks. The pair is rising towards the 1.3523 resistance zone and has a potential for a bullish inclination as sellers appear weak. The RSI and MACD are directing north and supporting bullish sentiment for now, but later today, we can presume the Canadian dollar to bestow us selling beneath 1.3636 level. Let's wait for the USD/CAD to examine the 1.3636 level ere taking a sell. Good luck!