USD/CAD weakens below 1.3100 handle on USD sell-off and surging oil prices

The USD/CAD pair extended Wednesday's rejection move from 50-day SMA hurdle and slipped below 1.3100 handle.

Currently trading around 1.3090-95 region, the pair snapped four consecutive days of winning streak and has now erased all of its gains recorded in the previous two sessions amid broad based greenback sell-off. Against the backdrop of disappointment from Wednesday's FOMC meeting minutes, comments from the US Treasury Secretary Steve Mnuchin intensified US Dollar selling pressure during early NA session.

In addition to this, higher-than-expected rise in the US initial weekly jobless claims further collaborated to the bearish sentiment surrounding the greenback and accelerated the pair's reversal move from multi-day tops beyond 1.3200 handle touched yesterday. 

Meanwhile, strong positive momentum in oil markets, with WTI crude oil posting gains in excess of 2.% and inching closer to $55.00/barrel mark, boosted demand for the commodity-linked currency - Loonie, and aggravated the selling pressure around the major.

Focus now shifts to the official EIA report on the US crude stockpiles and speech from the Dallas Fed President Robert Kaplan, which should provide some fresh trading impetus for the major during NY session.

Technical levels to watch

Bears would be eyeing for a break below 1.3080 level below which the pair is likely to drift towards 1.3025 horizontal support ahead of 1.30 psychological mark support.

On the upside, any recovery attempts above 1.3125 horizontal level now seems to confront resistance at the very important 200-day SMA near 1.3145-50 region above which the pair is likely to make a fresh attempt to reclaim 1.3200 handle.