By Ketki Saxena
Investing.com -- The risk-sensitive Canadian dollar weakened against its US counterpart today, as the rally in equities lost steam, with all attention now on a speech tomorrow from US Federal Reserve chairman Jerome Powell at Jackson Hole tomorrow.
The Canadian dollar gained little support from volatile crude prices today, which slid for most of the day before recouping some losses on news of a greater-than-expected European storage draw.
The risk-sensitive Canadian dollar weakened on Thursday against its broadly stronger U.S. counterpart as equity markets fell, but the currency's move stopped short of the three-month low it hit the previous day.
The US Dollar meanwhile rallied against a basket of currencies as Treasuries rebounded, and ahead of the Powell speech at Jackson Hole, which is expected to lean hawkish.
Looking ahead for the USD/CAD pair, analysts at Danske Bank note, "On the balance of risk, we still think it is skewed to the topside on both US economic outperformance and the USD-support stemming from global risk-off. "
"A move lower in the USD/CAD pair would likely require a stronger global growth backdrop than what we pencil in."
On a technical level for the pair, analysts at FX Street note "any follow-through buying above 1.3535 will be exposed to further upside. The mentioned level is a confluence of the middle line of the Bollinger Band and the 100-hour EMA. The next upside stop is located at 1.3575 (high of August 18, the upper boundary of the Bollinger Band), followed by a psychological figure at 1.3600. Further north, the pair will see a rally to 1.3650 (a high of May 31)."
"On the downside, the critical support zone for USD/CAD is located at the 1.3495-1.3500 region, portraying a psychological round figure and the lower limit of the Bollinger Band. The additional downside filter to watch is 1.3475 (Low of August 16) en route to 1.3445 (Low of August 15) and finally at 1.3410 (Low of August 11)."