USD/CAD: Mildly offered above 1.2700 as easing Ukraine-Russia fears weigh on oil, USD

• USD/CAD remains pressured around intraday low after snapping three-day uptrend earlier in Asia.
• Putin-Biden readiness for Ukraine summit joins Blinken-Lavrov talks to underpin hopes of easing Moscow-Kyiv tension.
• OPEC+ shows readiness to increase output even as supply concerns loom.
• Financial markets in the US, Canada are off but risk catalysts may entertain traders.

USD/CAD grinds lower around 1.2730-25, down 0.25% intraday as European traders brace for Monday’s bell. The Loonie pair rose during the last two days before posting the daily losses of late.

Market’s risk-on mood, as well as softer prices of Canada’s main export item WTI crude oil, seems to recently weigh on the quote.

Fresh chatters over a summit between US President Joe Biden and his Russian counterpart Vladimir Putin underpin hopes of Ukraine diplomacy and favor the risk-on mood. Also keeping the traders optimistic is the scheduled meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov. Though, headlines conveying the US preparedness to levy harsh sanctions on Russia, in case of Ukrainian invasion, keep the market optimists on the edge.

On the other hand, WTI crude oil drops 0.80%, around $89.50 by the press time, as global producers mull for further easing of output. Also keeping the oil prices depressed are the talks over Iran’s denuclearization. It should be noted that the receding fears over the Ukraine-Russia issue also drag energy prices.

Amid these plays, the S&P 500 Futures reverse the early Asian loss of around 0.50% while the US Dollar Index (DXY) remains pressured around 95.80 by the press time.

It should be noted, however, that an extended weekend in the US and Canada may challenge USD/CAD traders for the day even if the risk catalysts signal further downside of the pair.

Technical analysis

USD/CAD not only bounces off an upward sloping trend line from January 26, near 1.2690, but also portrayed a bull cross on the daily chart. That said, the 21-DMA pierces the 50-DMA from below, which in turn suggests the pair’s further upside. Also adding to the bullish bias is the firmer RSI line, recently around 55.00. That said, the 61.8% Fibonacci retracement (Fibo.) of December 2021 to January 2022 downside, near 1.2770, restricts the immediate upside of the quote.