The USD/CAD pair bounced from the daily lows near the 1.2525 level and staged a recovery of 40 pips in the early European session. The move is being sponsored by the stronger US dollar and the prevailing risk uncertainties in the markets. At the time of writing, USD/CAD is trading at 1.2565, up by 0.29% on the day. The pair started the fresh trading week on a positive note by shrugging off Friday’s weakness. The upbeat US economic outlook on behalf of the government support measures and a rapid vaccination drive keeps the US dollar in demand.
Fed Chair Jerome Powell in his interview with CBS’s news magazine said that the US economy is at an “inflection point” with stronger growth and hiring, but COVID-19 remains a threat. The prevailing risk-off mood in global equity indices also benefited the greenback. In the meantime, the recovery in crude oil prices limits losses for the pair. The loonie is directly affected by fluctuations in oil prices.