USD/CAD climbs to over 2-week tops, beyond 1.4200 mark as oil dives to sub-$18.00 levels

• USD/CAD gains positive traction for the second straight session on Tuesday.
• The USD remained well supported by persistent worries over coronavirus crisis.
• A sharp intraday fall in oil prices undermined the loonie and remained supportive.

The USD/CAD pair edged higher through the early European session and climbed to levels beyond the 1.4200 round-figure mark, or over two-week tops.

A combination of factors – including sustained US dollar buying and a fresh leg down in oil prices – assisted the pair to reverse an early dip to the 1.4100 neighbourhood and turn higher for the second consecutive session on Tuesday.

The greenback prolonged its upbeat momentum and remained well supported by its status as the global reserve currency amid persistent worries over the economic fallout from the coronavirus pandemic and a moderate risk-off trade.

The already weaker market sentiment was further weighed down by reports about the health of North Korean leader Kim Jong Un, which forced investors to take refuge in traditional safe-haven currencies like the greenback.

Apart from a broad-based USD strength, a sharp intraday fall in crude oil prices (now down over 10% for the day) undermined demand for the commodity-linked currency – the loonie – and further contributed to the pair's positive move.

Moving ahead, market participants now look forward to Tuesday's economic docket – highlighting the release of Canadian monthly retail sales figures and Existing Home Sales data from the US – for some short-term trading impetus.

Technical levels to watch