“¢ The latest positive trade-related development keeps exerting pressure on the USD.
“¢ Surging oil prices underpin Loonie and further collaborate to the heavy selling bias.
“¢ Technical selling below 1.3200 handle seemed to accelerate the downward momentum.
The USD/CAD pair weakened farther below the 1.3200 handle and dropped to near two-week tops during the early European trading session.
A combination of factors kept a lid on the pair’s attempted recovery during the Asian session, rather prompted some aggressive selling near the 1.3265-70 region.
The US Dollar remained heavily offered amid the latest trade-related optimism, wherein the world’s two largest economies agreed not to impose additional trade tariffs for at least 90 days.
This coupled with a strong rally in crude oil prices, supported by firming expectations of supply cut at an OPEC meeting on Dec. 6, further underpinned the commodity-linked Loonie and exerted some additional downward pressure.
Meanwhile, the latest leg of a sudden fall over the past hour or so could further be attributed to some fresh technical selling/long-unwinding pressure on a sustained breakthrough the 1.3200 handle.
A subsequent weakness below the 1.3185 strong horizontal support, held over the past 1-1/2 week, now seems to have opened the room for an extension of the intraday bearish slide.
Hence, a follow-through downfall, ahead of today’s release of scheduled speeches by influential FOMC members and the US ISM manufacturing PMI, now looks a distinct possibility.
Technical levels to watch
Immediate support is now pegged near mid-1.3100s, which is followed by the 1.3125 horizontal zone and the 1.3100 handle. On the flip side, any attempted recovery now seems to confront immediate resistance near the 1.3200 mark, above which a bout of short-covering could lift the pair back towards 1.3245-50 region.
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