USD/CAD hits 2-1/2 week lows, slides farther below 200-day SMA

   “¢   Extends last week’s sharp rejection slide amid the prevalent USD selling bias.
   “¢   Bearish traders seemed rather unaffected by a modest pullback in oil prices.

The USD/CAD pair held on to its offered tone at the start of a new trading week and fell to 2-1/2 week lows, around the 1.3125-20 region in the last hour.

The pair extended Friday’s sharp rejection slide from 100-day SMA barrier, despite softer Canadian monthly retail sales data, and remained under some selling pressure for the sixth trading session in the previous seven.  

The prevalent US Dollar selling bias, amid growing optimism over a possible resolution to the long-standing US-China trade disputes, turned out to be one of the key factors exerting some downward pressure on the major.

On Sunday, the US President Donald Trump said that he would delay an increase in the US tariffs on $200 billion of Chinese imports to 25% on March 1, citing productive trade talks between the world’s two largest economies.  

The downtick, further below the very important 200-day SMA, seemed rather unaffected by a modest pull-back in crude oil prices, which tend to undermine demand for the commodity-linked currency – Loonie.

Having pushed to 2019 highs last week, oil prices dipped on Monday as a result of the surge in the US oil output, which countered OPEC-led cuts as well as US sanctions against Iran’s and Venezuela’s oil exports.

It would now be interesting to see if the pair is able to find any buying interest at lower levels or emergence of technical selling below 200-DMA paves the way for further downside amid absent market-moving economic releases.

Technical levels to watch

Immediate support is pegged near the 1.3100 handle and is closely followed by YTD lows, around the 1.3070-65 region, below which the pair is likely to accelerate the fall towards challenging the key 1.30 psychological mark.

On the flip side, any attempted recovery move now seems to confront some fresh supply near mid-1.3100s (200-DMA), which if cleared might trigger a short-covering bounce towards reclaiming the 1.3200 round figure mark.