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  • USD/CAD came under some renewed selling pressure on Thursday amid weaker USD.
  • The upbeat market mood, Powell’s dovish comments undermined the safe-haven USD.
  • A modest pullback in oil prices failed to impress bulls or lend any support to the major.

The USD/CAD pair edged lower through the early European session and dropped to fresh daily lows, around the 1.2680 region in the last hour.

The pair failed to capitalize on the previous day’s modest bounce from three-week lows and met with some fresh supply during the first half of the trading action on Thursday. Wednesday’s weaker-than-expected US consumer inflation figures and dovish comments by the Fed Chair Jerome Powell kept the US dollar bulls on the defensive. This, in turn, was seen as a key factor exerting pressure on the USD/CAD pair.

In prepared remarks for a webcast to the Economic Club of New York, Powell indicated that easy policy is going to stay there for a long time and said that the central bank isn’t considering raising interest rates from the current near-zero levels. That said, a modest uptick in the US Treasury bond yields helped limit the downside for the greenback, albeit did little to lend any support to the USD/CAD pair.

Meanwhile, a pullback in crude oil prices might undermine the commodity-linked loonie and hold bearish traders from placing aggressive bets. The black gold witnessed some profit-taking on Thursday and eroded a part of the recent strong gains to over one-year tops. However, expectations for a strong fuel demand recovery – amid the progress in coronavirus vaccination – might continue to underpin the commodity.

There isn’t any major market-moving economic data due for release on Thursday. This leaves the USD/CAD pair at the mercy of the US/oil price dynamics. From a technical perspective, some follow-through selling below the overnight swing lows, around the 1.2665 region, will pave the way for a further near-term depreciating move.

Technical levels to watch