USD/CAD extends pullback from 1.3600 amid jittery markets
- USD/CAD bulls fail to take-out 1.3600 despite refreshing three-day top.
- US dollar seesaws amid mixed clues from the European Summit, virus woes.
- WTI prints three-day losing streak amid fears of demand depletion, risk-off.
USD/CAD fizzles upside momentum ahead of the European session on Monday. In doing so, the loonie pair drops from a three-day high of 1.3600 to 1.3585 by the press time. However, the bulls remain hopeful amid broad risk-off mood backed by the coronavirus (COVID-19) headlines and uncertainty surrounding major stimulus plans from the key economies.
With the latest surge in the US pandemic numbers past-3.7 million, the global count crossed 14.00 million, per Reuters’ tally. While policymakers in the US continue to defy calls of another lockdown, Financial Times cite fears of the double-dip recession in the world’s largest economy. Also weighing on the risk-tone sentiment could be the piece by Axios suggesting that the US Senate leader Mitch McConnell may disappoint markets with a $1 trillion stimulus package versus forecasts of $3 trillion.
Furthermore, the uncertainty surrounding the European stimulus worth 750 billion Euros also keeps the traders pushed towards the risk-safety. The latest updates from the European Summit suggest that the policymakers continue to haggle over the final decision with plans over 390 billion Euros of grants and 360 billion Euros of loans getting accolades.
Amid all these catalysts, the US 10-year Treasury yields drop over 1.1 basis points (bps) to 0.617% while the S&P 500 Futures decline 0.40% by the press time. Also portraying the risk-off mood could be WTI’s downside for the third consecutive day amid fears of receding global demand after the OPEC+ leaders agree to ease output cuts while expecting the otherwise.
Moving on, the pair traders will have to keep eyes on the risk catalysts like virus numbers and stimulus updates for fresh impetus. The reason could be traced from the light calendar as well as the present risk aversion wave.
Technical analysis
While a 200-day SMA level of 1.3511 restricts the pair’s immediate downside, bulls will wait for a clear break of the seven-week-old resistance line, at 1.3625 now, for fresh entries.