USD/CAD struggles near 34-month lows, around 1.2575-70 zone

The USD/CAD pair remained depressed through the early European session and was last seen hovering around the 1.2575 region, just above 34-month lows set earlier this Wednesday.

The pair extended its recent rejection slide from 50-day SMA and edged lower for the fifth consecutive session. The attempted intraday recovery quickly ran out of the steam near the 1.2600 round-figure mark amid the emergence of some fresh selling around the US dollar.

A modest pullback in the US Treasury bond yields failed to assist the greenback to capitalize on the previous day's goodish rebound from six-week lows. The treasury yields were dragged down by Fed Chair Jerome Powell's dovish remarks during the congressional testimony.

That said, the progress on US President Joe Biden's proposed $1.9 trillion stimulus package helped limit the downside for the US bond yields. Apart from this, a softer risk tone benefitted the greenback's relative safe-haven status and extended some support to the USD/CAD pair.

On the other hand, retreating crude oil prices undermined the commodity-linked loonie and held bearish traders from placing fresh bets around the USD/CAD pair. Oil prices fell on Wednesday after the American Petroleum Institute (API) reported a surprise build in US crude stocks last week.

Meanwhile, the USD/CAD pair's inability to register any meaningful recovery suggests that the near-term bearish trend might still be far from being over. Hence, any meaningful recovery attempted might still be seen as a selling opportunity and runs the risk of fizzling out quickly.

There isn't any major market-moving economic data due for release on Wednesday, either from the US or Canada. Hence, the key focus will remain on Powell's second day of the semi-annual testimony before the US Congress, which might influence the USD and provide some impetus to the USD/CAD pair.

Technical levels to watch