USD/CAD consolidates in a range, just above 1.3400 handle
- The USD fails to build on Friday’s goodish up-move and capped gains.
- Weaker Oil prices undermine Loonie and helped limit the downside.
The USD/CAD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band above the 1.3400 handle.
The pair failed to capitalize on last week's solid rebound from multi-month lows, with a combination of diverging forces failing to provide any meaningful impetus and leading to a subdued action at the start of a new trading week.
The US Dollar struggled to gain any follow-through traction or build on Friday's goodish up-move that came following the release of US monthly retail sales data, which dampened prospects for an immediate policy easing by the Fed.
Meanwhile, the downside remained cushioned amid some renewed weakness in Crude Oil prices, which undermined demand for the commodity-linked currency – Loonie and further collaborated to the range-bound price action on Monday.
Despite the recent escalation in the geopolitical tensions following attacks on two oil tankers near the Strait of Hormuz, concerns of a demand slowdown and the global supply glut kept a lid on any strong follow-through up-move in Crude Oil prices.
Investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sidelines ahead of the next big event risk – the highly anticipated FOMC monetary policy update, scheduled to be announced on Wednesday.
In the meantime, traders are likely to take cues from the US economic docket – featuring the release of Empire State Manufacturing Index, in order to grab some short-term trading opportunities later during the early North-American session.
Technical levels to watch