USD/CAD remains sidelined above 1.2500 even as oil prices rebound

• USD/CAD treads water around the lowest levels in two months.
• Oil prices recover amid Russia-Ukraine woes but market’s indecision limit the pair’s moves.
• Risk catalysts, speeches from BOC/Fed policymakers remain in focus for fresh impetus.

USD/CAD treads water around 1.2530 during Friday’s Asian session. In doing so, the Loonie pair pays a little heed to firmer prices of Canada’s key export, as well as the US dollar pullback, amid the market’s inaction.

The quote refreshed a two-month low the previous day as markets feared further hardships for Russia due to the invasion of Ukraine. The reason could be linked to the Western sanctions and recently chattered inaccuracy in Moscow’s military measures.

The latest upside in oil prices, however, has roots in the expectations that Europe’s reliance on Russian oil, which restricts the US to take stronger action against Russia, might not be able to solver the supply crunch fears. Among the latest challenges to the global supply chain are the recent covid resurgence and North Korea’s missile tests.

Against this backdrop, the S&P 500 Futures and the US Treasury yields remain indecisive with eyes on the Eurogroup meetings, as well as oil prices. It’s worth noting that WTI crude oil prices rise 0.76% intraday to $111.75 by the press time.

Also likely to direct intraday USD/CAD moves are the comments from Bank of Canada’s (BOC) Deputy Governor Toni Gravelle and a slew of Fed policymakers.

Technical analysis

A clear downside break of the 61.8% Fibonacci retracement (Fibo.) of October-December 2021 upside and bearish MACD signals joins sustained trading below the 200-DMA and multi-day-old rising trend line to keep USD/CAD bears hopeful to aim for January 2022 low surrounding 1.2450.