- USD/CAD came under intense selling pressure on Wednesday and fell to a new weekly low.
- The risk boost weighed on the safe haven USD and put downward pressure on the pair.
- The bulls seemed quite unimpressed by lower crude oil prices, which tend to undermine the loonie.
The pair USD/CAD continued to lose ground early in the North American session and fell to a fresh weekly low around the 1.2680 region in the last hour.
Having faced rejection near the 1.2780-1.2785 offering zone, the USD/CAD pair witnessed an aggressive long reversal trade on Wednesday amid renewed US dollar selling bias. The fact that the new economic sanctions on Russia were not as bad as feared helped calm nervousness about the situation in Ukraine and bolstered investor confidence. This was evident from a generally positive tone in equity markets, which, in turn, weighed on the safe-haven US dollar.
That said, a further rise in US Treasury yields should act as a tailwind for the dollar. Aside from this, a modest drop in crude oil prices could undermine the commodity-linked Canadian dollar and help limit any further losses for the USD/CAD pair, at least for now. The fundamental backdrop supports the prospects for buying on the dips around the USD/CAD pair and warrants some caution for bearish traders amid the absence of any relevant market-moving economic releases.
From a technical perspective, the good two-way price moves seen over the past four weeks point to indecision among traders about the next leg of a directional move for the USD/CAD pair. Furthermore, repeated failures near said trading range hurdle make it prudent to wait for some follow-up buying before positioning for any significant upside. However, any further decline is more likely to find decent support near the 1.2655-1.2650 region.
Technical levels
Source: Fx Street
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