USD/CAD again battles 1.2700, fades bounce off three-week low

• USD/CAD repeats failures to stay above 1.2700 since Tuesday.
• BOC’s Lane concentrated more on the digital currencies, Fed’s Powell struck downbeat statement.
• WTI bulls catch a breather after refreshing 11-month top.
• Light calendar, holiday in China and Japan keeps risk catalysts in the driver’s seat.

USD/CAD wavers around 1.2700, after bouncing off the lowest since January 22 before a few hours, during the initial Asian session on Thursday. In doing so, the bears cheer the broad US dollar weakness amid a lack of major positive at home, except for the upbeat performance of Canada’s main export item crude oil.

Despite parting ways from Bank of Canada’s (BOC) Deputy Governor Timothy Lane, Fed Chair Jerome Powell couldn’t propel the market moves while conveying worries over the US employment. The Fed Chief also showed readiness to act should fundamentals deteriorate further.

Elsewhere, WTI also recently consolidated gains from the highest since late January 2020. This suggests the oil price moves seem to have ignored upbeat inventory data from the Energy Information Administration (EIA) as well as the US dollar weakness off-late.

Even so, the USD/CAD remains in favor of the Loonie bulls as risks remain strong, despite the latest corrective move. Also favoring the Canadian dollar could be the downbeat inflation data from the US that signals a tough road ahead for the Fed.

Amid these plays, S&P 500 Futures stay mildly offered while following the mixed performance of Wall Street benchmarks. The dull sentiment could also be witnessed from the US 10-year Treasury yields.

Given the lack of major data/events at home and off in China and Japan, USD/CAD traders need to rely on the weekly Jobless Claims from the US as well as hints of American covid relief stimulus for fresh impulse.

Technical analysis

Although the 1.2700 mark guards immediate upside, USD/CAD bulls are less likely to be convinced unless witnessing a break of the descending trend line resistance from December 21, at 1.2860 now.