USD/CAD limited at 1.3625, returns below 1.3600

• US dollar rebound from 1.3505 has been capped at 1.3625.
• The dollar appreciated on fears of a new COVID-19 wave and downbeat comments from Fed's Powell.
• The CAD regains lost ground with equity markets and oil prices picking up.

US dollar’s rebound from session lows at 1.3505 has been capped at 1.3625 and the pair has trimmed gains, returning to the mid-range of 1.3500. The dollar spiked up on as market sentiment soured during Tuesday’s US session to retreat later on with equity markets resuming their positive trend.

Dollar pulls back as risk aversion eases

The US dollar bounced up from day lows near 1.3500 to 1.3625 highs after a bout of risk aversion triggered by reports about the increase of COVID-19 cases and a grim economic outlook painted by Fed chairman Jerome Powell offset enthusiasm following bright US retail sales and industrial production figures.

The pair, however, was unable to confirm above 1.3600 on its second attempt so far today, and retreated again towards 1.3550 area, turning negative on the daily charts. The market mood seems to have improved as the investors digest Powell’s comments with equities and oil prices bouncing up again.

USD/CAD: further weakness expected with next target 1.3482/73 – Credit Suisse

The FX analysis team at Credit Suisse see the pair on an overall bearish bias, targeting 1.3482 or lower, “We expect further weakness to unfold and see support initially at 1.3482/73, removal of which would see the small base negated and a fresh attempt at 1.3398, then 1.3365/57, ahead of the ‘neckline’ to the November/December 2019 base and 78.6% retracement of the 2020 surge at 1.3331/16, which may continue to prove a tough barrier. Removal of here though would then see the downtrend accelerate further, with support next at 1.3287.”