• Hotter-than-expected Canadian CPI prompts some aggressive selling.
• Weaker USD/positive crude oil prices add to the bearish pressure.
The USD/CAD pair retreated from over three-week tops and tumbled to an intraday low level of 1.3069 following the release of Canadian inflation figures.
The headline Canadian CPI surprised on the upside and came in to show a 3.0% y/y rise in July, marking the highest inflation rate since March 2011. Adding to this, the Bank of Canada's measure - core CPI, also climbed 1.6% y/y as against market expectations of a steady reading of 1.3%.
The pair turned sharply lower, taking along some short-term trading stops placed near the 1.3100 handle, in reaction the faster-than-expected rise in prices, with the prevalent weaker tone surrounding the US Dollar also doing little to lend any support.
Meanwhile, a goodish pickup in crude oil prices also underpinned the commodity-linked currency - Loonie and further collaborated to the pair's sharp decline, back closer to weekly lows and an important horizontal support near the 1.3055-50 region.
Technical levels to watch
A follow-through weakness below the mentioned support might turn the pair vulnerable to extend the retracement slide further towards testing the key 1.30 psychological mark en-route 100-day SMA support near the 1.2980-75 region.
On the flip side, any recovery attempt back beyond the 1.3100 handle now seems to confront fresh supply near the 1.3135 area (50-day SMA), above which the pair is likely to aim back towards challenging the 1.3170-75 supply zone.
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