USD/CAD weakens further below 1.3100 mark, lowest since January
|- USD/CAD remained under some selling pressure for the fourth consecutive session on Friday.
- Powell’s dovish comments, the upbeat market mood continued weighing on the greenback.
- A modest pullback in oil prices might undermine the loonie and help limit any further losses.
The heavily offered tone surrounding the greenback pushed the USD/CAD pair further below the 1.3100 mark, to the lowest level since January.
The pair extended this week's retracement slide from the 1.3240 supply zone and witnessed some follow-through selling for the fourth consecutive session on Friday. The downfall was exclusively sponsored by the prevalent US dollar selling bias and seemed rather unaffected by sliding oil prices, which tend to undermine the commodity-linked loonie.
The greenback failed to capitalize on the previous day's intraday recovery move and was being pressured by the Fed Chair Jerome Powell's dovish comments on Thursday. During his keynote speech at the Jackson Hole Symposium, Powell announced a shift to average inflation targeting and said that the Fed would let inflation run above its current 2% target.
In addition to the inflation change, Powell signalled that the Fed would seek to ensure that employment does not fall short of its maximum level. The remarks indicated that the Fed could keep rates lower for longer, which, in turn, was seen as a key factor that continued weighing on the USD through the first half of the trading action on Friday.
This coupled with the upbeat market mood further undermined the greenback's relative safe-haven status and contributed to the USD/CAD pair's ongoing downfall. Meanwhile, a modest pullback in oil prices, amid some profit-taking, might help limit any further losses, at least for the time being.
Market participants now look forward to the release of the monthly Canadian GDP report, which along with a slew of second-tier US economic data might produce some short-term trading opportunities. The US economic docket features the release of the Core PCE Price Index, Chicago PMI and revised Michigan Consumer Sentiment Index.
Technical levels to watch
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