• Subdued USD demand/bullish oil price continue to exert pressure.
• Resurgent US bond yields might now help limit any deeper slide.
The USD/CAD pair held on to its weaker tone for the second consecutive session but now seems to have found some support near mid-1.2700s.
The pair extended this week's retracement slide from levels beyond the 1.2900 handle and lost some more ground on Wednesday. The Canadian Dollar got a boost from better-than-expected manufacturing sales data, which along with some US Dollar profit-taking, led by mixed US economic data dragged the pair back below the 1.2800 handle.
The weakening trend continued through Thursday's trading session and was further weighed down by the resumption of bullish run in crude oil prices. Against the backdrop of worries over fresh US sanctions on Iran, a larger-than-expected fall in the US crude inventories lifted oil prices to fresh 3-1/2 year highs and eventually underpinned the commodity-linked currency - Loonie.
However, the ongoing upsurge in the US Treasury bond yields, which although failed to revive the USD demand, now seemed lending some support and might help limit deeper losses, at least for the time being.
Traders now look forward to the US economic docket, featuring the second-tier releases of the usual initial weekly jobless claims and Philly Fed Manufacturing Survey, in order to grab some short-term opportunities.
Technical levels to watch
A follow-through selling pressure below the 1.2730 immediate support might now turn the pair vulnerable to extend the downfall and head towards testing 100-day SMA, currently near the 1.2690 region.
On the upside, the 1.2790-1.2800 region now seems to act as an immediate resistance, which if cleared might lift the pair back towards 50-day SMA pivot near the 1.2825-30 region.
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