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  • USD/CAD witnessed an intraday turnaround from three-week tops set earlier this Wednesday.
  • Rebounding oil prices underpinned the loonie and remained supportive amid a pullback in the USD.
  • The latest BoC monetary policy update failed to impress traders or provide any meaningful impetus.

The USD/CAD pair extended its retracement slide from three-week tops and weakened further below the 1.3200 mark during the early North American session.

The pair witnessed an intraday pullback from the 1.3260 area on the back of a strong rebound in crude oil prices, which tend to undermine the commodity-linked currency – the loonie. Adding to this, the emergence of some fresh selling around the US dollar exerted some additional downward pressure on the USD/CAD pair.

The pair eroded a part of the previous day’s strong positive move and remained depressed after the Bank of Canada, as was widely expected, left interest rates unchanged at 0.25%. The bank also continued with its quantitative easing (QE) program, with large-scale asset purchases of at least $5 billion per week of Government of Canada bonds.

Meanwhile, language on the forward guidance was entirely unchanged and hence, did little to provide any meaningful impetus to the USD/CAD pair. Hence, it will be prudent to wait for some strong follow-through selling before confirming that the recent bounce from multi-month lows might have already run out of the steam and positioning for any further weakness.

Technical levels to watch