“¢ NAFTA/USMCA optimism continues to benefit the Canadian Dollar.
“¢ Bullish oil prices provide an additional boost to the commodity-linked Loonie.
“¢ Subdued USD demand, despite surging US bond yields, does little to lend support.
The USD kept losing ground against its Canadian counterpart, with the USD/CAD pair falling to fresh four-month lows around the 1.2800 handle in the last hour.
The Canadian Dollar continues to benefit from the latest optimism over the new NAFTA/USMCA deal. This coupled with the ongoing bullish run in crude oil prices further underpinned the commodity-linked Loonie and exerted some additional downward pressure on the major.
Meanwhile, the latest leg of downtick over the past couple of hours could further be attributed a mildly softer tone surrounding the US Dollar. Despite a goodish pickup in the US Treasury bond yields, the USD bulls held on the defensive and did little to lend any support to the major.
Apart from a combination of negative forces, the European session fall could further be attributed to some technical selling below the very important 200-day SMA. Hence, a follow-through weakness, ahead of today’s only important release of the US ISM manufacturing PMI, now looks a distinct possibility.
Technical levels to watch
Weakness below the 1.2800 handle is likely to accelerate the fall towards the 1.2740-35 region with some intermediate support around the 1.2770-65 area. On the flip side, any attempted recovery back above 1.2835 immediate resistance might now confront fresh supply near the 1.2870 region (200-DMA) ahead of the 1.2900 round figure mark.
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