USD/CAD pares losses around 1.2850 as oil retreats, focus on US Consumer Confidence, Fed

• USD/CAD picks up bids to consolidate daily losses and stays on the bear’s radar for the second consecutive day.
• Recession fears weigh on oil prices; US dollar rebounds strengthen corrective pullback.
• US Consumer Confidence, FOMC will be in focus as slowdown concerns probe central banks.

USD/CAD licks its wounds around 1.2840, heading into Tuesday’s European session. In doing so, the Loonie pair takes clues from the latest rebound in the US dollar and a pullback in prices of Canada’s key export item, WTI crude oil.

WTI crude oil prices fade upside momentum during the second consecutive positive day, up 1.50% intraday around 97.25 by the press time. The black gold’s latest weakness could be linked to the growing fears surrounding macro-economic slowdown and escalating fears that China won’t be able to renew market optimism despite heavy stimulus.

On the other hand, US Dollar Index (DXY) drops for the fourth consecutive day, paring intraday losses around 106.40 by the press time. It’s worth noting that a rebound in the US 10-year Treasury yields, down 2.8 basis points near 2.79%, appears to favor the US dollar in consolidating the recent losses. It’s worth noting that the global rating giant Moody’s downgraded growth forecasts for Eurozone and the US but failed to lift the US dollar.

Amid these plays, the S&P 500 Futures fail to trace Wall Street as it retreats to 3,955, down 0.30% intraday, whereas stocks in Asia-Pacific also remain pressured.

Moving on, the US CB Consumer Confidence for July, prior 98.7, and chatters surrounding the recession, can offer intermediate direction to the USD/CAD traders ahead of Wednesday’s Federal Open Market Committee (FOMC) meeting. It’s worth noting that the Bank of Canada’s (BOC) 100 bps rate hike remains support to the USD/CAD bears until the Fed follows the route, which is less likely.

Read: Fed Preview: Powell to reignite dollar rally with a promise to crush inflation, whatever the cost

Technical analysis

Sustained trading below the 50-DMA, around 1.2855 by the press time, keeps USD/CAD bears hopeful of breaking the 1.2800 threshold.