USD/CAD struggles to defend 1.2600 as Ukraine-Russia crisis favors oil buyers

• USD/CAD remains pressured around two-week low after declining for the last four days.
• Geopolitical tussles between Russia and Ukraine recently escalated over Mariupol.
• WTI crude oil consolidates two-week losses as news from Saudi oil plants joins Ukraine-Russia headlines.
• Qualitative catalysts will be the key to watch, Fed’s Powell, Biden’s NATO meet will be crucial events.

USD/CAD sellers attack 1.2600 during Monday’s Asian session, after posting the biggest weekly loss since late December 2021. In doing so, the Loonie (Canadian dollar) cheers firmer prices of Canada’s key export item, WTI crude oil, amid supply crunch fears due to the latest geopolitical tensions.

Among them, escalated geopolitical tensions in Mariupol of Ukraine and the recent attack on Saudi Arabian oil facilities by Yemeni Houthis were the major catalysts.

As per the latest headlines from Kyiv Independent, “Ukraine rejects Russia's demand to surrender Mariupol.” During the weekend, Ukrainian President Volodymyr Zelenskyy appealed to Israel for help in pushing back the Russian assault on his country, per Reuters.

It’s worth noting that the telephonic talks between US President Joe Biden and his Chinese counterpart Xi Jinping couldn’t offer any positives over the Ukraine-Russia issue. On the contrary, mentioning Taiwan raised fresh geopolitical fears.

On the other hand, Saudi oil plants were attacked by Yemen’s Houthis during the weekend. However, no major challenges to oil supplies could be known.

Elsewhere, the US Federal Reserve’s (Fed) rate-hike couldn’t help the US dollar bulls as Fed Chairman Jerome Powell tried placating reflation woes.

Amid these plays, S&P 500 Futures pause four-day uptrend and the US 10-year Treasury yields pick-up bids near 2.15% of late. Further, WTI crude oil prices rise 1.20% intraday while flashing $104.50 as a quote by the press time.

Looking forward, risk catalysts are likely to remain on the driver’s seat with Ukraine-Russia tensions likely escalating. As a result, the oil prices may witness further upside and can keep USD/CAD sellers hopeful.

Technical analysis

Although the monthly low around 1.2585 challenges USD/CAD sellers, the 200-DMA and 61.8% Fibonacci retracement of January-March upside, respectively near 1.2615 and 1.2625, restricts the short-term upside of the pair.