USD/CAD braces for fresh 2022 low on firmer oil prices, focus on Fed’s Powell

• USD/CAD bears keep reins around the lowest levels in two months.
• US dollar fails to cheer multi-month high Treasury yields.
• Oil prices regain upside momentum on geopolitical fears, softer greenback.
• Fed’s Powell, risk catalysts eyed for fresh impulse.

USD/CAD licks its wounds around a two-month low, retreats to 1.2575 heading into Wednesday’s European session.

The Loonie pair broke key supports the previous day while refreshing multi-day low amid broad US dollar weakness. That said, firmer prices of Canada’s key export item WTI crude oil seem to keep the pair sellers hopeful of late.

It should be noted that no positive announcements from the Ukraine-Russia peace talks, as well as Moscow’s war in Mariupol, keep the oil prices firmer even as indecision over Europe’s sanctions previously triggered the black gold’s pullback.

At the latest, prices of WTI crude oil reverse the previous day’s pullback from a two-week high, up 1.30% daily near $109.70.

Additionally favoring the USD/CAD sellers could be the US dollar’s failures to cheer the multi-month high US Treasury yields. Though, the market’s anxiety ahead of the speech from Fed Chairman Jerome Powell, who triggered bond rout during the early-week appearance, seems to restrict the momentum traders of late.

Against this backdrop, the US 10-year Treasury yields renewed the highest levels since May 2019 earlier in Asia, around 2.40% at the latest while the stock futures struggle to track Wall Street’s gains by the press time.

In addition to the speech from Fed’s Powell, risk catalysts are also important for USD/CAD traders to watch.

Technical analysis

USD/CAD sellers cheer the previous day’s clear downside break of an ascending trend line from June 2021 and the 200-DMA, respectively around 1.2585 and 1.2615, while targeting the 50% Fibonacci retracement (Fibo.) of June to December 2021upside, near 1.2485. However, the yearly low surrounding 1.2450 will challenge the pair bears afterward.