Forexpros – The U.S. dollar pared losses against its Canadian counterpart on Thursday, as fears that European leaders cannot agree on a resolution to the region’s debt crisis mounted following comments by German Chancellor Angela Merkel.
USD/CAD pulled back from 1.0438, the day’s low, to hit 1.0483 during European afternoon trade, down just 0.01% on the day.
The pair was likely to find support at 1.0369, Wednesday’s low and resistance at 1.0570, the high of October 5.
Market sentiment was hit after Merkel reiterated her belief that joint bonds would remove incentives for individual states to improve their fiscal discipline.
The comments came after ratings agency Fitch downgraded Portugal’s sovereign rating to junk status, citing large fiscal imbalances and high debts.
Risk appetite found support earlier after a report showed that German business confidence improved unexpectedly this month, indicating that the region’s debt crisis may not be affecting the euro zone’s second largest economy as much as experts had initially feared.
The Canadian dollar was slightly higher against the euro, with EUR/CAD slipping 0.13% to hit 1.3971.
Meanwhile, trade looked likely to remain subdued with markets in the U.S. closed for the Thanksgiving holidays.
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