USD/CAD reverses a knee-jerk slide to daily lows, back above 1.4400 mark
- USD/CAD faced rejection ahead of the 1.4500 mark amid some aggressive USD selling.
- The Fed announced a slew of new programs and exerted some heavy pressure on the USD.
- Recovering oil prices underpinned the loonie and further contributed to the sharp downfall.
The USD/CAD pair tumbled fresh session lows, around the 1.4335 region in the last hour, albeit quickly recovered around 80-90 pips thereafter.
In an effort to ease concerns over tightening liquidity conditions, the Fed on Monday announced a slew of new programs, including open-ended asset purchases aimed at helping markets function more efficiently amid the coronavirus crisis.
This comes on the back of the disappointment from the US Senate’s failure to pass the COVID-19 rescue package bill, which prompted some aggressive US dollar selling and turned out to be one of the key factors behind the pair's sharp decline.
Adding to this, some follow-through recovery in crude oil – moving farther away from the daily swing lows to the lowest level since 2003 – underpinned the commodity-linked currency – the loonie and further contributed to the pair's intraday slide.
Meanwhile, the Fed's latest move led to a sudden turnaround in the global risk sentiment and allowed the US Treasury bond yields to recover swiftly. This eventually extended some support to the USD and helped limit deeper losses, at least for now.
The pair has now moved back above the 1.4400 round-figure mark and the emergence of dip-buying suggests that the recent bullish trend might still be far from being over, supporting prospects for a further near-term appreciating move.
Technical levels to watch