USD / CAD clings to session lows, bears expect a sustained break below 1.2100

• A sharp drop in oil prices undermined the loonie and provided a modest intraday rise to USD / CAD.
• The decline in US bond yields kept dollar bulls on the defensive and limited any significant gains.
• Investors are now looking forward to US economic data to get some momentum ahead of Macklem’s speech.

The pair USD / CAD The intraday rally faded to the 1.2145 region and is now heading towards the lower end of its intraday trading range. The pair was last seen hovering around the 1.2110 region, down more than 0.15% for the day heading into the North American session.

A sharp intraday drop in crude oil prices undercut the commodity-linked Canadian dollar and provided a modest rise to the USD / CAD pair during the early part of the European session. The rally, however, lacked a strong follow-up buying and lost steam fairly quickly amid widespread US dollar weakness.

As investors looked past the harsh FOMC minutes, falling US Treasury yields did not help the USD capitalize on the overnight rebound from multi-month lows. This, in turn, prevented bull traders from making aggressive bets and kept any further gains for the USD / CAD pair limited, at least for the time being.

Meanwhile, weaker risk sentiment, as shown by a new leg to the downside in US equity futures, also didn’t do much to support the dollar as a safe haven.

Other than this, US bond yields could influence the USD and give the USD / CAD some boost. Traders could follow the signs of oil price dynamics, which, along with a timed speech by Bank of Canada Governor Tiff Macklem, should generate some significant business opportunities around the main one.

Technical levels