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  • USD/CAD drops to test the 1.2500 as the US dollar weakens.
  • Wall Street soars, hitting new record highs.

The USD/CAD is falling on Monday amid a weaker US dollar. The pair recently dropped to 1.2506, hitting the lowest in two weeks. It remains near the lows with the bearish tone intact.

The broad-based decline of the US dollar weighs on USD/CAD. A positive risk appetite sentiment favored the demand for more risky assets. US bond yields are up but not significantly. The 10-year yield  stands at 1.71%, of daily highs.

Economic data from the US came in above expectations, with the ISM service sector at a record high. The numbers continue to support expectations about the US economy outperforming.

Short-term technical outlook

The USD/CAD holds a bearish bias in the short-term, with the price under key moving averages in four-hour charts. On the downside, the next strong support is seen at around 1.2495. A break under 1.2490 would suggest more losses ahead.

A rebound should face resistance at 1.2525/30 and then at 1.2560. A consolidation above 1.2600 would negate the short-term negative bias and likely lead to some sideways trades ahead. A rally above 1.2640 would point to a stronger US dollar.

Technical levels