USD/CAD drops towards 21-DMA amid weaker USD, WTI rally
- USD/CAD corrects for the third day in a row amid risk-on mood.
- Upbeat mood downs the safe-haven US dollar, lifts WTI prices.
- 21-DMA to come to the rescue of the USD/CAD bulls.
USD/CAD is extending its corrective decline into the third straight day on Tuesday, as the US dollar licks its wounds after the recent sell-off amid a better appetite for riskier assets.
Easing fears of a sooner-than-expected Fed’s tapering combined with renewed covid vaccine optimism has ramped up the risk-on trades, weighing heavily on the safe-haven US dollar while triggering a 5% surge in WTI prices a day before.
The greenback continues to hold the lower ground amid persisting risk-on sentiment, especially after the Food and Drug Administration (FDA) granted full approval to Pfizer/ BioNTech’s COVID-19 vaccine.
Meanwhile, strong global equities and profit-taking after seven days of losses, helped WTI stage a solid turnaround, aiding the recovery in the resource-linked Loonie,
Recall that USD/CAD touched the highest levels in eight months 1.2949 last Friday but failed to sustain at higher, triggering a sharp correction, which continues so far this Tuesday.
USD/CAD: Technical outlook
The daily chart shows that USD/CAD is falling further towards the upward-pointing 21-Daily Moving Average (DMA) at 1.2577. Ahead of that the 1.2600 round number could test the bearish commitments.
The pair is currently trading at 1.2618, shedding nearly 0.35% on the day. Immediate resistance holds up at 1.2660, the opening price and daily high.
Further up, the July 21 high at 1.2730 could challenge the recovery attempts.
The 14-day Relative Strength Index (RSI) points south, but holds well above the midline, keeping the buyers hopeful.
USD/CAD: Daily chart
USD/CAD: Additional levels