The U.S. dollar edged higher against its Canadian counterpart on Monday, easing off Friday’s four-month trough as sentiment on the greenback improved ahead of the Federal Reserve’s policy meeting this week.
USD/CAD hit 1.3277 during early U.S. trade, the session high; the pair subsequently consolidated at 1.3256, rising 0.31%.
The pair was likely to find support at 1.3164, Friday’s low and a four-month low, and resistance at 1.3367, Friday’s high.
The dollar broadly weakened after China’s central bank boosted the fixed rate of the yuan following a sharp rally in the euro on Thursday, after European Central Bank President Mario Draghi appeared to indicate that the bank would not cut interest rates deeper into negative territory.
Market participants were eyeing the Fed’s next policy decision for hints on when the central bank plans to raise interest rates.
Meanwhile, the commodity-related Canadian dollar came under pressure as oil prices pulled back from three-month highs after Iranian Oil Minister Bijan Zanganeh said his country won’t join a group production freeze until it doubles its post-sanctions output.
The loonie was steady against the euro, with EUR/CAD at 1.4728.
The single currency remained under pressure after the ECB cut interest rates across the eurozone to new record lows and boosted its quantitative easing program last Thursday.
The ECB cut its benchmark interest rate to a record-low of zero from 0.05% and boosted its quantitative easing program by €20 billion per month to €80 billion, starting in April.