USD/CAD turned lower in Asian trading and extended losses after Canadian data to drop to a fresh low for the week. A momentum-driven rally in oil prices has kept bearish pressure intact.
Statistics Canada reported CPI mostly in line with expectations with month over month consumer prices unchanged following a decline of 0.1% in June. The annual gain of 1.2% was as expected and followed a prior rise of 1.0%. The exchange rate traded at 1.2653 ahead of the data and dropped towards support at 1.2578 following it, breaking below the prior low for the week at 1.1288.
Further weighing on USD/CAD was a sharp rise in oil prices which have been under pressure for most of the week. WTI crude oil prices (USOIL) fell lower from a rising trend channel on Monday and reached a low of $46.44 yesterday from this week’s open of $48.76. The channel originates from a low posted in June. Today’s recovery has wiped out over three-quarters of the early week loss. Oil prices were last seen retesting the broken trend channel, trading at $48.42 for a gain of 3.24%.
The greenback edged lower against a basket of currencies as an early day dip in DXY was met with buyers to trigger a range in European trading. The index is set to close the week with a small loss.
USD/CAD dropped below support from a rising trendline earlier this week to set a bearish tone. The trendline originates from a low posted on July 28th and a downside break materialized on Wednesday. Following today’s decline, the pair has set a succession of lower highs and lower lows from this week’s peak to further add to the case for a bearish scenario.
The pair has fallen below a horizontal level at 1.2578 which was respected as both support and resistance in late July. The level will be the first hurdle to the upside. Support for the pair is seen at 1.2529 as the level held it higher in May 2016 on a daily basis to trigger a turn that resulted in a one-year recovery. Slightly ahead of the level, the 61.8% Fibonacci level from July lows to this week’s high falls at 1.2552.