USD/CAD drops to 6-day lows near 1.3360

The USD/CAD pair came under a renewed bearish pressure in the second half of the day and dropped to its lowest level in nearly a week at 1.3359. As of writing, the pair was trading a couple of pips above that level, losing 0.21% on a daily basis.

Earlier in the day, the loonie gathered strength on rising crude oil prices. However, following a rally to a fresh 10-day high of $57.53, the barrel of West Texas Intermediate lost its traction. The Energy Information Administration in its latest report announced that it cut the global oil demand growth forecast by 40,000 and 20,000 barrels per day for 2019 and 2020, respectively to weigh on crude oil prices. Ahead of the weekly API stock data, the WTI is up only 20 cents, or 0.35%, on the day at $56.90.

Despite the oil's pullback, however, the pair continued to push lower in the second half of the day as the greenback continued to weaken against its rivals with the US Dollar Index dropping below the 97 handle. The index was is now losing 0.05% at 96.92. A 1.5% drop witnessed in the 10-year US T-bond yield seems to be the primary reason behind the buck's weakness. Earlier in the day, the U.S. Bureau of Labor Statistics announced that core CPI in February came in at 2.1% on a yearly basis and fell short of the market expectation of 2.2% to trigger the initial USD sell-off.

Commenting on the data, "Softer core reading emphasizes the cautious tone of central banks currently, and by extension suppressed vol and carry strategies. We note however that the USD remains the carry king within the G10, so the knee-jerk pop in the dollar bloc are unlikely to be sustained," TD Securities analysts said.

Technical levels to consider