The USD/CAD pair lacked any firm directional bias and seesawed between tepid gains/minor losses through the early European session on Tuesday. The pair struggled to build on its early uptick to a four-day high level of 1.2966, with a combination of negative forces keeping a lid on the steady recovery move from 3-1/2 month lows set last week. Despite a strong follow-through upsurge in the US Treasury bond yields, the US Dollar struggled to build on the overnight late recovery bounce and failed to provide any fresh bullish impetus. As of writing this article, the pair is trading at 1.2949 up 0.05% on the day. Adding to this, the prevalent bullish sentiment around crude oil prices continued underpinning the commodity-linked Loonie and further collaborated towards capping any meaningful up-move.
NAFTA Deadline Nears But Deal Looks Unlikely
Traders, however, seemed reluctant to place any aggressive bets ahead of this week’s key event risk – the latest FOMC monetary policy decision, scheduled to be announced tomorrow. This coupled with NAFTA uncertainties could possibly the reason behind the pair’s subdued range-bound price action through the early European session on Tuesday. With less than a week to go until a U.S.-imposed deadline for a new North American trade pact, slow progress on key issues has cast doubt on whether Canada and the U.S. can strike a deal on time. Among the sticking points is a concession Mexico made to the U.S. that exempts some online purchases from sales tax and Canada is not willing to go there.
Moving ahead, today’s US economic docket, highlighting the release of Conference Board’s consumer confidence index will now be looked upon for some short-term impetus later during the early North-American session. When looking from technical perspective, any further up-move beyond 1.2970-75 area is likely to get extended towards reclaiming the key 1.30 psychological mark before the pair eventually darts towards 100-day SMA hurdle near mid-1.3000s. On the flip side, the 1.2930-25 region is likely to protect the immediate downside and is followed by the 1.2900 handle, which if broken is likely to accelerate the fall towards 200-day SMA support near the 1.2865 region.