USD/CAD drops below 1.32 as DXY slumps to 3-week lows

• US Dollar Index extends decline for the third straight day.
• WTI posts modest daily gains on Tuesday.

The USD/CAD pair came under a renewed bearish pressure and erased more than 50 pips in the last hour to edge below the 1.32 mark. As of writing, the pair was virtually unchanged on the day at 1.3190.

A broad-based USD weakness seen in the early NA session seems to be the primary driver of the pair’s price action. The greenback struggled to gather strength on Tuesday amid, yet another, 1% drop witnessed in the 10-year T-bond yield. Additionally, today’s data and FOMC Chairman Powell’s comments failed to help the buck find demand. At the moment, the DXY is at its lowest level since the first week of February at 96.17, losing 0.26% on a daily basis.

In his testimony before the Congress, Powell reiterated that the Fed could stay patient with the monetary policy and added that the Fed would use all the tools available to sustain the economic expansion and to keep inflation near 2%.

On the other hand, the commodity-sensitive loonie is finding extra demand on the back of rising crude oil prices. Ahead of the API’s weekly crude oil stock report, the barrel of West Texas Intermediate is trading at $55.85, gaining 0.75% on the day.

Key technical levels