- USD/CAD struggled to capitalize on its intraday recovery move from multi-month lows.
- The USD selling remained unabated despite better US macro data and capped the upside.
- The BoC left its key interest rates unchanged and scaled back some market operations.
- A sustained break below 200-day SMA needed before positioning for any further slide.
The USD/CAD pair dropped around 75 pips and tumbled back closer to multi-month lows in a knee-jerk reaction to the BoC announcement.
A sharp intraday fall of around 5% in crude oil prices undermined the commodity-linked currency – the loonie – and assisted the pair to stage a goodish intraday bounce from the lowest level since early March. The uptick, however, lacked any follow-through, instead was sold into near the 1.3570 region amid a broad-based US dollar weakness.
The USD failed to gain any respite from Wednesday's release of the ADP report, which showed that private-sector employment in the US declined less-than-expected, by 2.76 million in May. Adding to this, the US ISM Non-Manufacturing PMI came in at 45.4 for May as compared to 44.0 anticipated, albeit once again failed to impress the USD bulls.
Meanwhile, the latest leg of a sudden fall during the early North American session came after the Bank of Canada (BoC) left its benchmark interest rates at 0.25% at the end of June policy meeting. However, the fact that the BoC scaled back some market operations amid improving financial conditions provided a goodish lift to the Canadian dollar.
Despite the sharp fall, the pair once again showed some resilience below the key 1.3500 psychological mark and quickly recovery around 30 pips. This makes it prudent to wait for a sustained break below the 1.3460 support (200-DMA) before traders start positioning for an extension of the pair's recent downward trajectory.
Technical levels to watch
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