USD/CAD clings to gains near multi-week tops, comfortably above 1.2600 mark
- A combination of factors assisted USD/CAD to gain traction for the second successive day.
- Sliding oil prices undermined the loonie and remained supportive amid a modest USD strength.
- Investors eye US Retail Sales and the Fed Chair Powell’s speech for a fresh trading impetus.
The USD/CAD pair added to its intraday gains and shot to near four-week tops, around the 1.2630 region during the early European session.
The pair built on the previous day's positive move and gained some follow-through traction for the second consecutive session on Tuesday. The momentum pushed the USD/CAD pair further beyond the very important 200-day SMA and was supported by a combination of factors.
Investors remain worried that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery and dent fuel demand. This was evident from the recent decline in crude oil prices, which, in turn, undermined the commodity-linked loonie.
Apart from COVID-19 jitters, political tension in Afghanistan took its toll on the global risk sentiment. This was seen as a key factor that drove some haven flows towards the US dollar and further contributed to the USD/CAD pair's ongoing positive move.
The uptick could further be attributed to some short-covering above a technically significant moving average. A subsequent strength beyond the 1.2600 round-figure mark might have already set the stage for a further near-term appreciating move for the USD/CAD pair.
Market participants now look forward to the release of US monthly Retail Sales figures. This will be followed by Fed Chair Jerome Powell's speech, which might influence the USD. Apart from this, oil price dynamics will provide some trading impetus to the USD/CAD pair.
Technical levels to watch