USD/CAD dropped to four-day lows during the first half of the European session
The USD/CAD pair extended the previous day's retracement slide from four-week tops and witnessed some selling through the first half of the European session on Wednesday. The downward trajectory dragged the pair to four-day lows, around the 1.2415-10 region in the last hour. The intraday downtick seemed rather unaffected by a pickup in demand for the US dollar, which drew some support from rebounding US Treasury bond yields and a softer risk tone. Bulls even shrugged off a downtick in oil prices, which tend to undermine the commodity-linked loonie. From a technical perspective, the USD/CAD pair was last seen flirting with confluence support comprising 200-hour SMA and the lower boundary of a three-week-old ascending channel. This should now act as a key pivotal point and help determine the near-term trajectory.
Meanwhile, technical indicators on the daily chart maintained their bearish bias and have been gaining negative traction on hourly charts. This, in turn, supports prospects for an eventual breakdown, though traders might be reluctant ahead of the US consumer inflation figures. That said, a sustained break below might prompt aggressive technical selling and turn the USD/CAD pair vulnerable. The next relevant support is pegged near the 1.2345 region, below which the downward trajectory could further get extended back towards the 1.2300 round-figure mark. On the flip side, any meaningful move up now seems to confront immediate resistance near the 1.2455-60 region. Some follow-through buying should allow the USD/CAD pair to surpass the 200-day SMA barrier, near the 1.2475 region, and aim to reclaim the key 1.2500 psychological mark.