USD/CAD slides below mid-1.2600s, fresh session lows

USD/CAD drifted into the negative territory for the second straight session on Wednesday.
A strong recovery in crude oil prices underpinned the loonie and exerted downward pressure.
Surging US bond yields should act as a tailwind for the USD and help limit any deeper losses.

Haresh Menghani FXStreet

The USD/CAD pair extended its intraday retracement slide and dropped to fresh daily lows, below mid-1.2600s during the early North American session.

The pair struggled to capitalize on its modest intraday gains, instead met with some fresh supply near the 1.2730 region and turned lower for the second consecutive session on Wednesday. A strong follow-through recovery in crude oil prices, now up over 2% for the day, underpinned the commodity-linked loonie and prompted some selling around the USD/CAD pair.

As investors looked past Tuesday's API report, which showed a surprise build in US crude inventories, a further improvement in the global risk sentiment benefitted the black gold. The risk-on flow held traders from placing fresh bullish bets around the safe-haven US dollar, which was seen as another factor that contributed to the USD/CAD pair's decline.

However, fresh COVID-19 outbreaks involving the Delta variant has raised concerns about the short-term fuel demand outlook and might cap the upside for the black gold. Apart from this, surging US Treasury bond yields acted as a tailwind for the USD, which, in turn, should help limit any deeper losses, rather assist the USD/CAD pair to attract some dip-buying.

There isn't any major market-moving economic data due for release on Wednesday, either from the US or Canada. Hence, the spotlight will be on the official report on US crude inventories from the Energy Information Administration later during the US session. Traders might further take cues from the USD price dynamics to grab some short-term opportunities around the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price	1.2639
Today Daily Change	-0.0042
Today Daily Change %	-0.33
Today daily open	1.2681

Trends
Daily SMA20	1.2459
Daily SMA50	1.2267
Daily SMA100	1.2375
Daily SMA200	1.2623

Levels
Previous Daily High	1.2787
Previous Daily Low	1.2675
Previous Weekly High	1.2621
Previous Weekly Low	1.2427
Previous Monthly High	1.2487
Previous Monthly Low	1.2007
Daily Fibonacci 38.2%	1.2718
Daily Fibonacci 61.8%	1.2744
Daily Pivot Point S1	1.2642
Daily Pivot Point S2	1.2602
Daily Pivot Point S3	1.253
Daily Pivot Point R1	1.2754
Daily Pivot Point R2	1.2826
Daily Pivot Point R3	1.2866

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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