USDCAD struggles to cheer risk-off mood, DXY rebound amid firmer Oil prices

• USDCAD remains pressured near the two-month low, picks up bids of late.
• Market sentiment deteriorates ahead of the key G20 meeting.
• Downbeat comments from IMF add strength to the risk aversion.
• Oil prices print three-day uptrend amid hopes of more demand from China, easy monetary policy.

USDCAD struggles for clear directions as the 100-DMA challenges the bears at the lowest levels in two months during early Monday. In doing so, the Loonie pair justifies the market’s anxiety, as well as the mildly bid prices of Canada’s main export item WTI crude oil.

Market sentiment sours amid a light calendar as traders remain cautious ahead of the key gathering of the Group of 20 Nations (G20) in Bali, starting from Monday. Also testing the previous optimism were the latest comments from US President Joe Biden, Federal Reserve (Fed) Governor Christopher Waller and the International Monetary Fund (IMF).

Reuters quotes US President Biden as saying that the US communication lines with China would stay open to prevent conflict, with tough talks almost certain in the days ahead. The news also mentioned, “The United States would ‘compete vigorously’ with Beijing while "ensuring competition does not veer into conflict", said Biden, stressing the importance of peace in the Taiwan Strait during an address to the East Asia Summit in Cambodia. He arrived in Bali on Sunday night.” On the same line, US Treasury Secretary Janet Yellen also mentioned, per Reuters, “Biden-Xi meeting aimed at stabilizing u.s. relationship with china, but have been clear about national security concerns.”

Elsewhere, Fed’s Waller said, “Rates will not fall until there is ‘clear, strong evidence’ inflation is falling.” The policymaker, however, also mentioned that the Fed can begin to consider moving at a slower pace.

It should be noted that the IMF blamed the darker outlook on tightening monetary policy triggered by persistently high and broad-based inflation, weak growth momentum in China, and ongoing supply disruptions and food insecurity caused by Russia’s invasion of Ukraine, per Reuters.

Alternatively, hopes of more stimulus from China and persistent geopolitical crisis, as well as the global oil producers’ supply cuts, defend the WTI crude oil buyers of late. “Oil prices rose nearly 1% on Monday, extending gains from the previous session as China eased some of its strict COVID-19 protocols, fuelling hopes of a recovery in economic activity and demand at the world's top crude importer,” said Reuters.

It’s worth noting that the previously released US data raised expectations of the Fed’s pivot and drowned the US dollar, which in turn highlights this week’s US Retail Sales for fresh impulse.

Technical analysis

Although the USDCAD pair’s sustained trading below the 50-DMA, around 1.3530 at the latest, keeps sellers hopeful, the 100-DMA level surrounding 1.3230 restricts the quote’s immediate downside.