USD/CAD consolidates in a range, comfortably above 1.3200 mark
- USD/CAD struggled to capitalize on the previous day’s solid bounce from multi-month lows.
- The upbeat market mood weighed on the safe-haven USD and capped the upside for the pair.
- A mildly softer tone around oil prices undermined the loonie and helped limit deeper losses.
The USD/CAD pair extended its sideways consolidative move through the early European session and remained confined in a range, around the 1.3220 region.
A combination of factors failed to assist the pair to capitalize on the previous day's goodish rebound from the vicinity of multi-month lows and led to a subdued/range-bound price action on Tuesday. The upbeat market mood weighed on the US dollar's relative safe-haven status, which, in turn, was seen as one of the key factors capping the upside for the USD/CAD pair.
The global risk sentiment remained well supported by the positive developments on a potential vaccine and treatment for the highly contagious coronavirus disease. It is worth reporting that the Trump administration is considering fast-tracking an experimental COVID-19 vaccine for use in the United States ahead of the November 3 elections.
Adding to this, the US FDA issued an emergency authorization on Sunday to use blood plasma from recovered patients to treat certain patients suffering from the COVID-19 virus. Even a strong pickup in the US Treasury bond yields failed to impress the USD bulls or provide any meaningful impetus, albeit might help limit any deeper losses.
Meanwhile, a mildly weaker tone surrounding crude oil prices undermined the commodity-linked currency – the loonie – and further contributed towards limiting any meaningful downside for the USD/CAD pair. However, it will be prudent to wait for some strong follow-through buying before traders start positioning for any further appreciating move.
Market participants now look forward to the release of the Conference Board's Consumer Confidence Index, which might influence the USD price dynamics and produce some short-term trading opportunities. The key focus, however, will remain on the Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this week.
Technical levels to watch