• Extends overnight retracement on renewed USD weakness.
• Surging crude oil prices aggravating selling pressure.
• US durable goods/FOMC minutes eyed for fresh impetus.
The USD/CAD pair extended overnight retracement from 2-1/2 week tops and is currently placed at the lower end of its weekly trading range, around mid-1.2700s.
On Tuesday, the pair touched an intraday high level of 1.2837 but failed to build on the up-move amid some renewed US Dollar selling pressure. Traders even shrugged off an unexpected decline in the Canadian wholesale sales and better-than-expected existing home sales data from the US, with sliding US Treasury bond yields prompting some fresh US selling.
With the greenback holding weaker, a strong rally in crude oil prices underpinned the commodity-linked currency - Loonie and continued weighing on the major for the second consecutive session on Wednesday. Oil prices rose sharply on Canadian pipeline disruption to the United States, which added to the positive news of a fall in the US crude oil inventories and prolonged OPEC-led production cut.
Later during the NA session, the US economic docket, featuring the release of durable goods orders and weekly crude oil inventories, would now be looked upon for some immediate respite for the USD bulls. The focus, however, would be on the FOMC meeting minutes, which would drive the buck in the near-term and provide some fresh directional impetus.
Technical levels to watch
A follow-through weakness below mid-1.2700s is likely to get extended towards the 1.2700 handle before the pair eventually drops to test 1.2670-60 strong horizontal support.
On the upside, 1.2770-75 area now seems to act as an immediate resistance, above which the pair is likely to move past the 1.2800 handle and retest 1.2835 supply zone.
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