USD/CAD slides further below mid-1.2200s, fresh multi-year lows and counting

The USD/CAD pair continued losing ground through the mid-European session and dropped to fresh multi-year lows, around the 1.2235-30 region in the last hour.

Following an early uptick to the 1.2285-90 area, the pair turned lower for the second straight session on Thursday and was being pressured by the emergence of some fresh selling around the US dollar. Wednesday's rather unimpressive US economic data reaffirmed dovish Fed expectations and triggered a modest USD pullback from two-week tops.

The greenback was further weighed down by a softer tone surrounding the US Treasury bond yields and failed to gain any respite from a generally cautious risk tone. The USD bulls even shrugged off better-than-expected Initial Weekly Jobless Claims, which fell to 498K last week from the previous week's upwardly revised reading of 590K.

Even weaker crude oil prices – now down around 0.50% for the day – did little to undermine the commodity-linked loonie or lend any support to the USD/CAD pair. That said, overstretched technical indicators on short-term charts might hold traders from placing fresh bearish bets and help limit any further losses, at least for the time being.

Moreover, investors might also prefer to wait on the sidelines and wait for Friday's release of the closely-watched US monthly jobs data for a fresh directional impetus. The NFP report will be looked upon for clues on when the Fed might dial back monetary stimulus, which, in turn, will play a key role in influencing the USD in the near term.

Friday's economic docket also features the release of Canadian employment details. this, along with oil price dynamics, should help determine the USD/CAD pair's next leg of a directional move.

Technical levels to watch