USD/CAD refreshes seven-month lows below 1.3150 ahead of Canadian CPI

• USD/CAD drops further on renewed US dollar selling.
• Losses in WTI fails to rescue the bulls amid risk-off mood.
• All eyes on Canadian CPI and FOMC minutes.

The selling pressure around the USD/CAD pair remains unabated, as the rates renew seven-month lows below 1.3150 in the European session.

The latest leg down in the spot is mainly driven by a fresh bout of selling seen in the US dollar across its main competitors, prompting the greenback to stall its recovery momentum from 26-month lows.

The extension of the weakness in the US Treasury yields across the curve continues to exert downward pressure on the buck despite the optimism over the US fiscal stimulus. Falling US yields imply that the economic recovery remains in the doldrum while the election risks pick up.

Meanwhile, the resource-linked Canadian dollar stands resilient to the losses in WTI, collaborating with USD/CAD’s downside. Broad risk-aversion knock-off the higher-yielding oil, as markets ignore the unexpected draw in the US weekly crude stockpiles data published by the American Petroleum Institute (API) late Tuesday.

The pair remains vulnerable ahead of the Canadian CPI release and the FOMC minutes due later in the NA session. Dovish FOMC minutes could exacerbate the pain the dollar, intensifying the selling pressure in the major.

USD/CAD Technical levels

“Considering the break of key supports, the quote is likely to extend the downside towards 1.3100 round-figures as immediate rest-point before attacking 1.3050 level comprising 61.8% of Fibonacci retracement. On the flip side, June month low near 1.3315 can entertain the buyers during the pair’s pullback, if any, a break of which will escalate the recoveries to an upward sloping trend line from September 2017, at 1.3420 now,” FXStreet’s Analyst Anil Panchal explained.

USD/CAD Additional levels