USD/CAD offered near 1.2600, looks to test 1.2550

The offered tone behind the US dollar keeps growing bigger, as we head into the European session, sending the USD/CAD pair back to test the key support near 1.2570 region, below which floors will open up for a test of yesterday’s low reached at 1.2556.

USD/CAD forms lower highs on daily sticks

The retreat from six-week tops extends into a third day today, as the bulls remain at bay amid an extension of the sell-off in the US dollar against its major peers. The greenback came under renewed selling pressure amid falling Treasury yields, as risk sentiment deteriorates further amid negative European equities.

On the CAD-side of the equation, the resource-linked Loonie remains somewhat underpinned by stabilizing oil prices after yesterday’ sharp drop. WTI now trades near $ 59.50 levels, holding firmly above the $ 59 mark.

Next of note for the spot remains the speech by the FOMC member Mester due later in the NA session, which could provide fresh insights on the US interest rates outlook. Meanwhile, the pair awaits fresh direction from Wednesday’s US CPI release.

USD/CAD levels to watch

Yohay Elam, Analyst at FXStreet, notes, “1.2790 was high in mid-November and serves as resistance. 1.2665 was a double-bottom in November and works as strong support. It is followed by 1.26, a round number that worked as resistance in October. 1.2540 capped the pair in early October when it traded in a narrow range.”

“1.2435 was a cushion for the pair during the month of October. 1.2335 gave support to the pair in late September and it worked well in January 2018. Even lower, 1.2250 cushioned the pair on its fall in February 2018. It is closely followed by 1.22. Strong support only awaits at 1.2070. The round number of 1.20 is next. And below there, only 1.18,” Yohay adds.