USD / CAD falls to new daily lows below 1.2800 level

• USD / CAD sees some selling on Friday, pressured by a combination of factors.
• Bullish oil prices support the CAD and put pressure on the pair amid a modest decline in the USD.
• The drop appears limited, as investors’ attention remains on the monthly job reports for the United States and Canada.

The pair USD / CAD it has finally broken out of its consolidation range and has fallen to fresh daily lows, around the 1.2785 region, at the start of the European session on Friday. At the time of writing, the pair is recovering slightly from that level, although remains below 1.2800.

A combination of factors has not helped the pair to take advantage of the positive movement of the previous day and has caused new sales on the last trading day of the week. The pair’s rise has remained limited amid the prevailing bullish sentiment around crude oil prices, which tend to underpin demand for the Canadian dollar, a currency tied to commodity prices.

In fact, oil prices have risen to the highest level in a year amid optimism about a strong global economic recovery and demand for fuel. Black gold has also been supported by the fact that OPEC + has extended its current oil production policy. This, coupled with a modest pullback in the US dollar, has led to some selling around the USD / CAD pair.

Following the recent strong positive move to the highest level in over two months, USD has seen some profit-taking amid softer tone around US Treasury yields. That said, the prospects for massive US fiscal spending and positive macroeconomic data from the country should continue to provide some support to the USD.

Aside from this, the reluctance to open aggressive positions before the Friday release of the US and Canada monthly job details it could help limit any significant declines for the USD / CAD pair. This, in turn, warrants some caution for bears and could lead to a sideways move ahead of key risk events.

USD / CAD technical levels