USD/CAD drops further below 1.2900, test weekly lows

• CAD among top performers boosted by data and higher crude oil prices.
• USD/CAD reversed after approaching 1.3000, now heads to a key support area.

The USD/CAD pair is falling sharply on Wednesday. During the American session, it accelerated the decline and recently bottomed at 1.2840, slightly above Monday’s low. Yesterday traded at a 6-week high at 1.2996.

The move higher was capped below 1.3000 and the pair reversed sharply. Today, US and Canadian economic data favored more losses. Also the decline was boosted by a weaker US Dollar and the rally in crude oil prices. The US Dollar Index erased daily gains, after retreating from 4-month highs while the WTI is up almost 3% at fresh multi-year highs near $71.00 a barrel.

In the US, the PPI showed a gain of 0.1% in April, below the 0.2% expected. The report had no relevant impact on the market. On Thursday CPI data is due. In Canada, building permits soared in March 3.1% surpassing expectation of a 2.0% gain.

Technical levels

To the downside, the immediate support is seen at 1.2830 before the key 1.2800/10 area that capped the decline last week. A break below 1.2800 is likely to increase significantly the negative tone. On the flip side, now 1.2900/05 is again a resistance level followed by 1.2935 and the 1.3000 zone.