- USD/CAD witnessed some follow-through selling for the third consecutive session on Thursday.
- A modest USD rebound, a pullback in crude oil prices helped limit the downside, at least for now.
- Upbeat US macro releases failed to impress bullish traders or provide any meaningful impetus.
The USD/CAD pair recovered a major part of its early lost ground to monthly lows and was last seen trading with only modest losses, just above the key 1.2500 psychological mark.
The pair extended this week's rejection slide from the 1.2625-30 heavy supply zone and remained depressed for the third consecutive session on Thursday. The downward momentum pushed the USD/CAD pair further below the key 1.2500 psychological mark, to the lowest level since March 22.
However, a modest US dollar rebound from four-week lows assisted the USD/CAD pair to find some support near the 1.2475 region and recovery around 30-40 pips from daily swing lows. The USD found additional support from mostly upbeat US macro releases, though lacked any strong follow-through.
Investors have started looking through the headline-grabbing numbers as transitory and seem convinced that the Fed will keep rates low for a longer period. This was evident from the continuous decline in the US Treasury bond yields, which capped any meaningful gains for the greenback.
On the other hand, the disappointing release of Canadian Manufacturing Sales data for March and an intraday pullback in crude oil prices undermined the commodity-linked loonie. This might hold bearish traders from placing aggressive bets and help limit the downside for the USD/CAD pair.
From a technical perspective, the intraday slide below the 1.2500 level marked a bearish break through a short-term trading range. Hence, any attempted recovery could be seen as a selling opportunity, suggesting that the path of least resistance for the USD/CAD pair remains down.
Technical levels to watch
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