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  • USD/CAD drops for the fourth consecutive day while taking rounds to late January lows.
  • US dollar stays pressured amid hopes of stimulus, WTI benefits from upbeat API data.
  • BOC Lane, EIA stockpile and risk catalysts are the key.

USD/CAD holds lower ground near the lowest since January 27, currently around 1.2695, during the initial Asian trading session n Wednesday. In doing so, the loonie pair prints a four-day downtrend while following the US dollar’s downbeat performance and gains of Canada’s main export item crude oil.

US dollar index (DXY) dropped for the third consecutive day while extending pullback from the two-month top on Tuesday. In addition to the hopes of US President Joe Biden’s $1.9 trillion covid relief stimulus, receding fears of the coronavirus (COVID-19) also contributes to the US dollar’s latest declines.

The much-awaited US fiscal stimulus is currently on the debate in the American Congress whereas Democrats are firm to get it passed despite the Republicans’ probe to the details. However, the pre-announcement cautious sentiment seems to pause the greenback bears off-late. Elsewhere, the covid vaccinations are on the rise but the variants seem to trigger worries recently.

Talking about oil, the WTI benchmark stays positive near $58.30 after rising to the fresh high since January 2020 the previous day. Recently helping the oil bulls could be the upbeat industry stockpile data from the American Petroleum Institute (API).

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Against this backdrop, Wall Street benchmarked closed mixed on Tuesday while the S&P 500 Futures struggle for a clear direction around the record top above 3,900 by press time.

Considering the presence of the US Consumer Price Index (CPI) and a speech from Bank of Canada’s (BOC) Deputy Governor Timothy Lane, USD/CAD traders are likely to stay cautious in extending the latest downtrend. Also important will be the weekly
EIA Crude Oil Stocks Change for the US, expected 1.34M versus -0.994M prior.

Technical analysis

Unless breaking a seven-week-old resistance line, at 1.2855 now, USD/CAD can’t avoid revisiting multiple supports around 1.2630.