- Loonie unable to hold to gains versus the US dollar.
- DXY strengthens amid risk aversion, higher US yields.
- Correction in commodity prices weighs on CAD, AUD and NZD.
The USD/CAD turned to the upside during the American session and printed a fresh daily high at 1.2772. Earlier it bottomed at 1.2683. The pair rose almost a hundred pips as the US dollar gained momentum amid a reversal in commodity prices.
Risk aversion continues to dominate the mood across financial markets. The greenback gained momentum during the last hours as the recovery in equity prices faced and also amid a decline in commodity prices, erasing the initial spike.
The loonie did not benefit earlier on Monday from higher crude oil prices against AUD and NZD. More recently, in American hours CAD recovered momentum pushing NZD/CAD and AUD/CAD back to neutral territory. The loonie rose boosted by risk aversion and not on higher crude oil prices.
The key driver continues to be the war in Ukraine and the response from the US and its allies. The Biden administration is looking to ban imports of Russian oil. The announcement sent crude oil prices to fresh highs since 2008.
Levels to watch
The USD/CAD is approaching again the 1.2800 area, a key resistance. A daily close above should point to more gains. The next resistance levels might be located at 1.2835 and 1.2875 (February high).
If the pair remains under 1.2800, a correction back to the 1.2700 seems possible. Below the key support stands at 1.2665; a break lower would expose 1.2630 and then the February low at 1.2585.