- USD/CAD was seen oscillating in a range below mid-1.3200s on Thursday.
- The USD remained depressed amid the impasse over the US fiscal stimulus.
- A modest pullback in oil prices undermined the loonie and helped limit losses.
The USD/CAD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a range near six-month lows, below mid-1.3200s.
A combination of diverging forces failed to provide any meaningful impetus to the major, instead led to a subdued/range-bound price action through the early European session on Thursday. The US dollar remained depressed in the wake of the impasse over the next round of the US fiscal stimulus measures.
This coupled with a fresh leg down in the US Treasury bond yields exerted some additional pressure on the greenback. However, a softer tone around crude oil prices undermined the commodity-linked currency – the loonie – and helped limit deeper losses for the USD/CAD pair, at least for the time being.
Oil prices slipped around 0.50% on Thursday after the OPEC – in its monthly report – said that the fuel demand could fall more than expected. The statement overshadowed the US government data, which showed a fall in inventories and suggested that demand is returning despite the coronavirus pandemic.
Looking at the technical picture, the pair has been trending lower along a downward sloping channel over the past one month or so. The formation points to a well-established bearish trend and supports prospects for an extension of the recent bearish trajectory, even below the 1.3200 mark.
Moving ahead, market participants now look forward to the release of the US Initial Weekly Jobless Claims. The data will influence the USD price dynamics and produce some short-term trading opportunities later during the early North American session on Thursday.
Technical levels to watch