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USD/CAD eases after hitting fresh multi-year tops, around mid-1.3800s

  • USD/CAD attracted some dip-buying near mid-1.3700s and rallied over 100 pips intraday.
  • The ongoing slump in crude oil prices undermined the loonie and remained supportive.
  • A strong pickup in the USD demand provided an additional boost to the positive move.

The USD/CAD pair jumped to fresh four-year tops, around the 1.3855 region during the early North-American session, albeit quickly retreated few pips thereafter.

The pair managed to attract some dip-buying near mid-1.3700s and rallied over 100 pips intraday in the wake of a fresh leg down in crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie.

Oil prices tumbled again on Thursday after the US President Donald Trump's travel ban implied a further hit to fuel demand from airlines, which added to Saudi Arabia's reluctance to discuss any form of market coordination in the near term.

This coupled with a strong pickup in the US dollar demand – despite tumbling US Treasury bond yields – provided an additional boost and remained supportive of the pair positive upsurge the highest level since February 2016.

Another round of a panic selling across the global equity markets continued boosting demand for traditional safe-haven assets, including the US Treasuries, through did little to discourage the USD bulls or hinder the pair's positive move.

However, extremely overbought conditions on the daily chart might hold investors from placing fresh bullish bets, which might eventually cap gains, rather prompt some long-unwinding trade amid absent relevant market-moving economic data.

Technical levels to watch

 

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