USD/CAD drops to 4-day lows, closer to 1.30 handle
| • CAD benefits from the latest optimism over NAFTA negotiations.
• Weaker USD/bullish oil prices add to the selling pressure.
• Focus remains on the latest FOMC monetary policy update.
The USD/CAD pair extended this week's retracement slide from 9-month tops and dropped to fresh weekly lows during the early European session.
On Wednesday, the Canadian Dollar benefitted from a new sense of optimism in the NAFTA negotiations after the Trump administration dropped the contentious auto-content proposal.
This coupled with a combination of factors, ranging from a modest US Dollar retracement and bullish crude oil prices, which tends to underpin demand for the commodity-linked currency - Loonie, further collaborated to the pair's weaker tone for the third consecutive session.
The pair, however, has managed to hold its neck above the key 1.30 psychological mark as investors preferred to wait for the latest FOMC monetary policy update, especially the latest economic projections and the outlook for future interest rates, for a fresh directional impetus.
Technical levels to watch
A follow-through weakness below the 1.30 handle might continue exerting downward pressure and drag the pair towards mid-1.2900s en-route its next major support near the 1.2920-10 region. On the upside, 1.3050 area now seems to act as an immediate hurdle, above which the pair could make a fresh attempt to move back above the 1.3100 handle.
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