USD/CAD sellers attack 1.2700 as WTI strength joins US dollar weakness

USD/CAD remains heavy near the intraday low of 1.2703, down 0.06% on a day, during Wednesday’s Asian session. The loonie pair dropped for the first time in the last four days on Tuesday, while also carrying the losses today, amid the broad US dollar weakness and gains in Canada’s main export item crude oil. It should be noted that the mixed clues to justify trading sentiment coupled be spotted for a bid milder downside bias.

Crude prices recently jumped to the fresh high since February 2020, currently up 0.90% at $53.65, after private oil inventories shrank more than the previous readings. Also favoring the commodity is the broadly risk-on mood and US dollar weakness.

Read: WTI refreshes multi-month high above $53.00 on upbeat API stockpile data, focus on EIA figures

On the contrary, the US dollar index (DXY) drops for the second day while marking a 0.08% intraday loss to 89.96. The greenback’s weakness could be attributed to the political drama in the US relating to President Donald Trump’s impeachment and President-elect Joe Biden’s hint of mammoth fiscal stimulus.

While roiling the mood, worsening coronavirus (COVID-19) conditions in the US, the UK and Europe, not to forget Japan and some parts of Asia, probe vaccination drives. That said, S&P 500 Futures and stocks in Asia-Pacific remain mildly bid but the US 10-year Treasury yields snap seven-day north-run.

Looking forward, risk catalysts to remain in the driver’s seat even as December’s Consumer Price Index (CPI) from the US can offer intermediate moves.

Technical analysis

A one-week-old support line near 1.2700 challenges USD/CAD bears targeting the monthly low around 1.2630. Meanwhile, 21-day SMA and a downward sloping trend line from December 21, respectively around 1.2770 and 1.2820, guard the pair’s short-term upside.