USD/CAD falls to 1.26 support, lowest since Oct. 23

   •  Persistent USD weakness keeps exerting downward pressure.
   •  Bullish oil prices further aggravating the selling bias. 

The USD/CAD pair extended last week's rejection slide from the very important 200-day SMA and dropped to over 2-month lows on Thursday.

The pair traded with a bearish bias for the sixth consecutive session and is now threatening to break below 100-day SMA support near the 1.2600 handle amid persistent US Dollar selling bias.

With the passage of a long-awaited US tax reform bill failing to revive the USD demand, the recent rally in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and kept exerting downward pressure around the major.

Meanwhile, thin liquidity conditions, ahead of the year-end holidays, seems to have further aggravated the selling pressure and has now retreated over 300-pips from levels beyond the 1.2900 handle, touched on December 19. 

Moving ahead, today's second-tier US economic releases and EIA crude oil inventories data would now be looked upon for some fresh impetus later during the NA session.

Technical levels to watch

A convincing break below the 1.26 handle is likely to accelerate the fall towards 1.2565 horizontal support before the pair eventually aims towards testing the key 1.25 psychological mark.

On the upside, any recovery attempts might now confront fresh supply near mid-1.2600s, above which a bout of short-covering could lift the pair back beyond the 1.2700 handle.