USD/CAD refreshes session tops, bulls await a sustained move beyond 1.2600 mark

A combination of factors assisted USD/CAD to catch some fresh bids on Tuesday.
The upbeat US economic outlook, rising US bond yields benefitted the greenback.
A softer tone around oil prices undermined the loonie and remained supportive.
The USD/CAD pair refreshed daily tops during the early European session, with bulls making a fresh attempt to build on the momentum beyond the 1.2600 mark.

Following the previous day’s pullback from the 1.2625-30 region, the pair managed to regain some positive traction on Tuesday and was supported by a combination of factors. The US dollar shot to fresh four-month tops amid the upbeat US economic outlook. Apart from this, a softer tone around crude oil prices undermined the commodity-linked loonie and provided a modest lift to the USD/CAD pair.

Investors remained optimistic about the prospects for a relatively faster US economic recovery amid the impressive pace of coronavirus vaccinations and the passage of a massive stimulus package. Further feeding the expectations were the US President Joe Biden’s pledge of administering 200 million vaccine shots in 100 days and hopes for an additional $3.0 trillion infrastructure plan from the US.
Meanwhile, worries that a new wave of COVID-19 infections, pandemic-related lockdown and the slow vaccine rollouts in Europe could hinder the anticipated recovery in demand for fuel products. This, in turn, weighed on crude oil prices and was seen as another factor that provided an additional boost to the USD/CAD pair, supporting prospects for a further near-term appreciating move.

That said, it will still be prudent to wait for some follow-through buying beyond the 1.2625-30 region before positioning for any further appreciating move. The market focus now shifts to an OPEC+ meeting this week and Friday’s release of the US monthly jobs report (NFP). This will play a key role in driving the USD/CAD pair and help investors to determine the near-term trajectory.

In the meantime, Tuesday’s release of the Conference Board’s Consumer Confidence Index will be looked upon for some impetus. The data, along with the US bond yields, will influence the USD. Traders might further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.