USD/CAD in search of a firm direction, stuck in a range around mid-1.3300s
• Bears fail to capitalize on the ongoing USD retracement from near 1-month tops.
• Positive oil prices do little to boost Loonie and provide any meaningful impetus.
The USD/CAD pair struggled to build on overnight modest rebound and seesawed between tepid gains/minor losses through the early European session on Thursday.
The prevalent US Dollar selling bias, amid signs of easing US-China trade tensions and slowing inflationary pressure in the US, turned out to be one of the key factors failing to provide any meaningful impetus to the major.
Adding to this, a modest uptick in crude oil prices, which tend to underpin the commodity-linked currency Loonie, further collaborated towards keeping a lid on any meaningful up-move, at least for the time being.
Against the backdrop of the OPEC-led supply curbs announced last week, oil prices were further supported by the overnight EIA report that showed the US crude inventories fell by 1.2 million barrel in the week to Dec. 7.
Despite a combination of negative factors, the downside seemed limited, at least for the time being, and remained cushioned by the recent BoC dovish tilt, diminishing prospects for a January rate hike.
Hence, it would be prudent to wait for a strong follow-through selling before confirming that the pair might have already topped out, or positioning for any further near-term downfall.
Technical levels to watch
The 1.3325-20 region might continue to protect the immediate downside and is closely followed by the 1.3300 handle, below which the pair is likely to accelerate the slide further towards retesting the 1.3255-50 support area.
On the flip side, the 1.3380-1.3400 region now seems to have emerged as an immediate strong hurdle, which if cleared decisively should assist the pair to head back towards retesting 18-month highs, around the 1.3445 region.