“¢ A modest USD retracement fails to assist the pair to build on overnight rebound.
“¢ Surging oil prices underpin Loonie and add to the renewed selling pressure.
“¢ Relatively thin economic docket seems unlikely to provide any meaningful impetus.
The USD/CAD pair extended its retracement from an intraday high level of 1.3208 and dropped back closer to two-week lows in the last hour.
Against the backdrop of the pair’s inability to sustain/build on its momentum back above the 1.3200 handle, a combination of factors prompted some fresh selling on Tuesday and kept exerting downward pressure through the mid-European session.
Despite a goodish pickup in the US Treasury bond yields, the US Dollar struggled to build on previous session’s strong up-move and failed to assist the pair to build on overnight modest recovery attempt.
This coupled with a strong follow-through upsurge in crude oil prices underpinned the commodity-linked currency – Loonie and further collaborated to the pair’s intraday fall of over 60-pips.
It would now be interesting to see if the pair is able to find any support at lower levels or continue drifting lower amid relatively thin economic docket, featuring the second-tier release of Canadian manufacturing PMI and factory orders data from the US.
Technical levels to watch
A follow-through selling pressure has the potential to continue dragging the pair further towards the 1.3100 handle, below which the slide could further get extended towards the 1.3065-60 support.
On the upside, any recovery attempts might now confront immediate resistance near the 1.3180 level and is followed by the 1.3200 handle, which if cleared might trigger a near-term short-covering bounce.
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