USD / CAD remains depressed below 1.2050, clings near multi-year lows

• A good rally in oil prices sustained the loonie and sparked further selling around USD / CAD.
• Better-than-expected retail sales data provided an additional boost to the loonie.
• Falling US bond yields and risk appetite kept USD bulls on the defensive and contributed to the sell bias.

The pair USD / CAD it extended its steady intraday decline during the early days of the American session and updated the daily lows, around the 1.2030-25 region in the last hour.

The pair struggled to capitalize on its initial rally, instead meeting fresh offers near the 1.2100 level and declining for the second consecutive session on Friday. The drop was sponsored by a positive rally in crude oil prices, now above 2% on the day, which tend to prop up demand for the commodity-linked Canadian dollar.

The loonie received an additional boost following the release of better-than-expected domestic retail sales figures. Data released by Statistics Canada showed that the total value of retail sales increased 3.6% in March. This marked a notable slowdown from February’s 4.8% growth, but was still higher than the anticipated 2.3% increase.

On the other hand, the US dollar languished near multi-month lows amid expectations that the Fed would maintain its ultra-losing monetary policy for a longer period. Added to this, a further downward leg in US Treasury yields and prevailing bullish sentiment in equity markets acted as a headwind for the safe-haven dollar.

Meanwhile, the USD / CAD pair has now moved well within the surprising distance of the six-year lows, around the 1.2015-10 region touched earlier this week. This is closely followed by the 1.2000 psychological level, which if decisively broken will lay the foundation for an extension of a well-established bearish trajectory of more than a year.

Technical levels