- USD / CAD continues to lose ground for the third day in a row and falls to a more than two-month low.
- Selling around the USD after the US CPI remains unabated and is seen as a key factor putting some pressure on the pair.
- A pullback in oil prices weighs on the CAD and helps limit deeper losses amid cautious sentiment.
The pair USD / CAD has fallen to a new two-month low at 1.2465 during the European session on Thursday, although it has quickly recovered a few pips. At the time of writing, the pair is trading at 1.2484, shedding -0.16% on the day.
The pair witnessed some sales for the third day in a row on Thursday and extended its weekly losses amid an extension of the US dollar’s slide after the release of the US CPI. Since a Fed rate hike in March was already fully priced in, USD witnessed aggressive selling in a typical “sell the fact” trade following the release of inflation figures of the American consumer.
The sell bias remained unabated during the first part of Thursday, although the rally in US Treasury yields and a softer risk tone offered some support to the USD safe haven. Apart from this, a pullback in crude prices weighed on the CAD, a currency pegged to commodity prices, and helped limit any further losses for the USD / CAD pair, at least for the time being.
Having said that, the technical setup still seems tipped in favor of the bears and supports the prospects for a further downward movement in the short term. Negative prospects are reinforced due to the fact that the USD / CAD lost the 100-day SMA earlier this week. A subsequent fall and acceptance below the psychological level of 1.2500 they also validated the bearish bias.
Therefore, any recovery attempt is likely to attract new sales at higher levels and remain limited. Market participants are now awaiting the US economic calendar, with the IPP producer price index and weekly jobless claims. This, along with the dynamics of the oil price, could generate some short-term opportunities around the USD / CAD pair.
USD / CAD technical levels
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