USD/CAD remains firmly above 1.2730s amid Russia/Ukraien conflict jitters and higher oil prices

• The USD/CAD rises some 0.01% in the North American session.
• Russia-Ukraine conflict tensions “appear” to ease, but mixed news keeps traders nervous.
• USD/CAD remains range-bound amid the lack of a catalyst to guide the pair.

The USD/CAD begins the week on the right foot extends its gains for the third straight day amid a risk-off market mood, spurred by the Russia-Ukraine conflict jitters. At the time of writing is trading at 1.2735, above last Friday’s highs.

Risk-aversion looms the financial markets, as developments since last Friday’s when news that a Russian invasion of Ukraine was “imminent” spurred erratic movements in all the assets classes. In the FX market, safe-haven peers rose and found follow through on Monday, as the USD is the strongest, followed by the JPY.

In the case of the USD/CAD, the Loonie got a boost from rising oil prices. Concerns of not enough supply caused the jump since Friday, as Russia is the third-largest producer of natural gas and oil. So, any escalations and the invasion of Russia to Ukraine could weigh on oil prices and put a lid on the USD/CAD price. At press time, WTI is trading at $94.56 power barrel,  up 0.49%

The latest development of the Ukraine-Russia conflict keeps showing mixed messages from western and Ukrainian sources

Earlier in the day, as reported by CNN, US intelligence indicates that Russia continues to build up forces around Ukraine “in preparation for possible military action this week,” a senior US official briefed on the intelligence, per CNN.

However, as reported by Interfax, a Ukrainian official said that the country sees no full-scale of Russian attack in the coming days.

Concerning central bank policy, the expectations of a Federal Reserve “aggressive” tightening looms, as US inflation for January rose to 7.5, while the Core CPI that exclude volatile items jumped to 6%, spurred reactions of the more “hawkish” member of the Fed. On Friday, St. Louis President James Bullard backpedaled from what he said at the beginning of the month, emphasizing that he would favor a 50 bps increase to the Federal Funds Rate (FFR) and expect it to be at 1% by July. Those remarks increased the demand for greenback.

On Monday, the Canadian and US economic docket are absent. On Tuesday, the Canadian docket would feature Housing Starts for January. On the US front, prices paid for producers, with the Producer Price Index (PPI), followed by the Redbook.

USD/CAD Price Forecast: Technical outlook

The USD/CAD is neutral-upward biased, as shown by the daily moving averages (DMAs) above the exchange rate. As previously mentioned, the USD/CAD is range-bound, unable to break the 1.2650-1.2780 range, with only false breakouts upwards/downwards, amid the lack of a catalyst or the convergence of central bank monetary policy conditions.

That said, the USD/CAD resistance levels are the February 11 high at 1.2753, followed by January 31 at 1.2776, and then the January 28 swing high at 1.2796. On the flip side, the first support would be February 10 daily high previous resistance-turned-support at 1.2727, followed by the 50-DMA at 1.2701 and then February 10 daily low at 1.2635.