USD/CAD sinks to four-month lows, below mid-1.3100s

The USD/CAD pair extended its near-term depreciating move and has now dropped to fresh four-month lows near 1.3140-30 region.

The latest leg of downslide on Wednesday could be attributed to upbeat comments from the Bank of Canada (BOC) Governor Poloz that rate cuts have done their job and expect Canada’s growth to stay above potential.

Meanwhile, persistent greenback selling interest, with the key US Dollar Index sinking to yearly lows near the 96.00 handle, has been one of the key factors driving the pair lower. The buck extended recent losses despite of Tuesday's upbeat Consumer Confidence Index and the Fed Chair Janet Yellen's remarks that gradual interest rate hikes remains appropriate. 

Adding to this, the recent recovery in WTI crude oil prices provided an additional boost to the commodity-linked currency - Loonie, and further collaborated to the pair's slide to its lowest level since late Feb. 

With the health-care bill failing to find enough support in the US Senate, growing concerns over Trump administration's inability to push through pro-growth economic policies might continue to weigh on the greenback and hence, a follow through weakness now seems a distinct possibility.

Moving ahead, additional comments from BOC Governor Stephen Poloz would remain in focus on Wednesday as he speaks during a panel discussion at the European Central Bank Forum. Later during the NA session, the release of pending home sales and weekly crude oil inventories data would also be looked upon for some immediate respite for the bulls.

   •  BoC: Governor Poloz’s remarks consistent with an Oct hike - TDS

Technical levels to watch

Immediate support is pegged at the 1.3100 handle, below which the pair is likely to accelerate the slide towards 1.3050 horizontal support before eventually dropping to the key 1.30 psychological mark.

On the flip side, any recovery attempts back above mid-1.3100s might now confront fresh supply near 1.3195-1.3200 region, which if cleared might trigger a short-covering rally towards 1.3255-60 intermediate resistance en-route the 1.3300 round figure mark.