USD/CAD bears cheer softer US Dollar, bank optimism to approach 1.3600 despite sluggish Oil price

• USD/CAD remains pressured around intraday low, drops for the second consecutive day as bears poke the key support.
• Risk-on mood, softer US Data weigh on US Dollar ahead of the key catalysts.
• Oil price struggles for clear directions after rising the most in 10 months.
• Risk catalysts, second-tier US data and Canada budget eyed for clear directions.

USD/CAD bears keep controls around 1.3640-35 heading into Tuesday’s European session, positing 0.17% intraday losses during a two-day downtrend. In doing so, the Loonie pair fails to justify the latest pause in the WTI Crude Oil price, as well as the US Dollar’s broad weakness.

It’s worth noting that the WTI Crude Oil prints mild losses near $72.80 while consolidating the biggest daily loss in 10 months, marked the previous day. While the commodity’s previous uptrend could be linked to the market’s cautious optimism, the latest pullback in the black gold appears linked to China-related headlines.

Elsewhere, the US Dollar Index (DXY) drops for the second consecutive day to 102.65, down 0.21% intraday by the press time.

While tracing the US Dollar’s weakness, the global policymakers’ efforts via stretched emergency credit lines to troubled banks and deposit insurance schemes underpin the firmer sentiment and weigh on the US Dollar. Recently adding strength to the risk-on mood were comments from the central bank officials pushing back the banking crisis concerns and the Silicon Valley Bank (SVB) deal.

On Monday, US Treasury Department said that the US will keep using tools to prevent banking contagion as needed.  Before that, Federal Reserve Governor Philip Jefferson and Fed Vice Chair for Supervision Michael Barr showed readiness to tame the banking crisis while signaling ease in the inflation woes.

It’s worth noting that the recently downbeat US data weighed on the hawkish Fed bets, especially after talks of US recession, previously teased by Minneapolis Fed President Neel Kashkari, which in turn exerted downside pressure on the US Dollar and USD/CAD prices. On Monday, the US Dallas Fed Manufacturing Business Index dropped to -15.7 in March versus -10.9 expected and -13.5 prior.

While portraying the mood, the US 10-year and two-year Treasury yields grind lower around 3.51% and 3.92% by the press time, paring the week-start rebound after witnessing a three-week downtrend. That said, the stocks in the Asia-Pacific zone remain firmer while S&P 500 Futures print mild gains at the latest.

Looking ahead, Canada’s Annual Budget Release will be the key event for the USD/CAD pair traders to watch, in addition to the US Conference Board’s (CB) Consumer Confidence for March, as well as the second-tier housing and activity data.

Also read: US Consumer Confidence Preview: No good news for Americans

Technical analysis

A convergence of the 200-bar Exponential Moving Average (EMA) joins the 38.2% Fibonacci retracement level of the pair’s February-March upside, near 1.3630, appears a tough nut to crack for the USD/CAD bears to crack.