- USD / CAD falls for the fifth day in a row on Wednesday.
- A combination of factors offers some support and helps limit losses.
The pair USD / CAD remains under pressure during the European session on Wednesday, staying around the 1.2575 region, just above the 34-month lows previously set during the Asian session near 1.2560.
The pair has extended its recent rejection dip from the 50-day SMA and has moved lower for the fifth day in a row. The intraday recovery attempt has quickly been exhausted near the round 1.2600 level amid the emergence of some new selling around the USD.
A modest pullback in U.S. Treasury yields hasn’t helped the USD capitalize on the good rally the day before from the six-week lows. Treasury yields have been dragged down for the pessimistic comments of the Fed chairman, Jerome Powell, during testimony before Congress.
Having said that, progress on the $ 1.9 trillion stimulus package proposed by President Joe Biden has helped limit the decline in US bond yields. Other than this, a softer risk appetite sentiment has slightly benefited the safe-haven US dollar and offered some support to the USD / CAD pair.
On the other hand, the fall in crude prices has weighed on the Canadian dollar, currency linked to the prices of raw materials, and has prevented the pair’s bears from opening new positions around USD / CAD. Oil prices fell on Wednesday after the American Petroleum Institute (API) reported that there was an unexpected rise in stocks of US crude last week.
In the meantime, the inability of the USD / CAD pair to register a significant recovery suggests that the short-term downtrend could still be far from over. Therefore, any significant recovery attempt could be seen as a selling opportunity and risks failing quickly.
There is no major economic data release on Wednesday, neither from the United States nor from Canada. Therefore, the key focus will remain on the second day of Powell’s semi-annual testimony to the US Congress, which could sway the USD and provide some boost to the USD / CAD pair.
USD / CAD technical levels
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