USD/CAD struggles near multi-week lows, trying to defend 200-DMA ahead of NFP
- USD/CAD refreshed multi-week lows on Friday amid a broad-based USD weakness.
- A softer tone around crude oil prices undermined the loonie and helped limit losses.
- Investors also seemed reluctant to place aggressive bets ahead of the US NFP report.
The USD/CAD pair dropped three-week lows, around the 1.2540 region during the early European session, with bears now awaiting a sustained break below the very important 200-day SMA.
The US dollar languished near one-month lows amid expectations that the Fed will wait for a longer period before rolling back its massive pandemic-era stimulus. Moreover, doubts about the US labour market recovery has further dampened prospects for an early lift-off. This turned out to be key factors that continued weighing on the greenback and acted as a headwind for the USD/CAD pair.
Apart from this, the underlying bullish sentiment in the financial market – as depicted by a generally positive tone around the equity markets – further dented the USD's relative safe-haven status. That said, a downtick in oil prices held traders from placing any aggressive bullish bets around the commodity-linked loonie and assisted the USD/CAD pair to defend a technically significant 200-day SMA.
Investors also seemed reluctant, rather preferred to wait on the sidelines ahead of the closely-watched US monthly jobs data, scheduled later during the early North American session. The popularly know NFP report could provide clues about the likely timing of the Fed's tapering plan and play a key role in influencing the USD in the near term. Apart from this, oil price dynamics will provide some trading impetus to the USD/CAD pair on the last trading day of the week.
Technical levels to watch