USD/CAD retreats modestly after rising to fresh multi-month highs above 1.2800

  • USD/CAD is rising sharply at the start of the week.
  • Risk-averse environment helps USD find demand on Monday.
  • WTI is down more than 3%, trading around 0.6900.

After closing the second straight week in the positive territory, the USD/CAD pair preserved its bullish momentum on Monday and reached its highest level since late January at 1.2805 before going into a consolidation phase. As of writing, the pair was up 1.1% on a daily basis at 1.2750.

WTI extends slide on Monday

The unabated USD strength and slumping crude oil prices fuel USD/CAD’s rally at the start of the week. With global equity indexes suffering heavy losses, the greenback continues to find demand as a safe haven. Reflecting the USD’s upbeat performance, the US Dollar Index is trading at its highest level in more than three months at 92.95, up 0.26% on the day.

Meanwhile, the Dow Futures and the S&P Futures are down 1.2% and 1.45%, respectively, suggesting that risk-off flows are likely to provide an additional boost to the USD in the second half of the day.

On the other hand, crude oil prices push lower amid heightened concerns over the coronavirus Delta variant hurting the recovery in global energy demand. At the moment, the barrel of West Texas Intermediate (WTI) is losing 3.2% on the day at $69.15, weighing on the commodity-sensitive loonie.

There won’t be any high tier data releases featured in the North American economic calendar on Monday and the USD’s market valuation is expected to drive USD/CAD’s action in the remainder of the day.

Technical levels to watch for