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  • USD/CAD witnessed some fresh selling on Wednesday and snapped two days of winning streak.
  • The prevalent USD selling bias was seen as one of the key factors exerting pressure on the pair.
  • The loonie seemed rather unaffected by weaker oil prices as the focus remains on BoC decision.

The USD/CAD pair edged lower through the Asian session and was last seen trading near the lower end of its daily range, just below the 1.2800 mark.

The pair failed to capitalize on the previous day’s recovery move of around 55-60 pips from the 1.2770-65 region, or the lowest level since April 2018 and met with some fresh supply on Wednesday. The USD/CAD pair, for now, seems to have snapped two consecutive days of the winning streak and the downtick was exclusively sponsored by sustained US dollar selling bias.

Positive news on COVID-19 vaccines remained supportive of the prevalent upbeat market mood. The risk-on flow dented demand for the safe-haven US dollar, which was further pressured by hopes for another round of US fiscal stimulus measures. This, in turn, was seen as one of the key factors that exerted some fresh downward pressure on the USD/CAD pair on Wednesday.

Meanwhile, a goodish pickup in the US Treasury bond yields failed to provide any respite to the USD bulls. Even a softer tone surrounding crude oil prices, which tend to undermine the commodity-linked loonie, also did little to lend any support to the USD/CAD pair. That said, the downside is likely to remain limited ahead of the BoC monetary policy decision later today.

Investors might also refrain from placing fresh bearish bets amid near-term oversold conditions. Hence, any subsequent fall might continue to attract some buying near the 1.2770-65 region. A sustained breakthrough will be seen as a fresh trigger for bearish traders and set the stage for an extension of a near one-month-old downward trajectory.

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