“¢ The USD remains on the defensive amid dovish Fed expectations.
“¢ Surging oil prices underpin Loonie and add to the bearish pressure.
“¢ Technical selling below 1.3290 region further accelerates the downfall.
The USD/CAD pair accelerated its sharp intraday slide and tumbled to over 2-1/2 week lows, around the 1.3250 region in the last hour.
After some good two-way price moves over the past couple of days, a combination of negative forces prompted some aggressive selling pressure on Tuesday and dragged the pair below the last week’s swing lows support near the 1.3290-85 region.
Against the backdrop of the recent softness in the US economic data, growing market expectations that the Fed will opt for a more accommodative policy stance was seen as one of the key factors that kept exerting downward pressure on the US Dollar.
Adding to this, the ongoing bullish run in crude oil prices to four-month tops, levels just above mid-$59.00s, provided an additional boost to the commodity-linked currency – Loonie and further collaborated to the pair’s sharp intraday slide.
Meanwhile, possibilities of some short-term trading stops being triggered on a sustained break below the 1.3300 handle and the 1.3290-85 support zone, further aggravated the selling pressure and dragged the pair to its lowest level since March 1.
In absence of any major market moving economic releases, the USD/oil price dynamics might continue to act as key determinants of the pair’s momentum ahead of the next big event risk – the latest FOMC monetary policy update, due to be announced on Wednesday.
Technical levels to watch
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