USD/CAD plummets to 4-month lows, below mid-1.2300s

   •  USD remains under intense selling pressure. 
   •  Mnuchin’s comments trigger fresh downward spiral. 
   •  US data/crude oil inventories eyed for some respite. 

The USD/CAD pair extended this week's rejection slide from the key 1.2500 psychological mark and dropped to 4-month lows, below mid-1.2300s, in the last minute. 

The relentless US Dollar downward spiral accelerated further after the US Treasury Secretary Steven Mnuchin endorsed a weaker US currency as beneficial to the economy. The USD Index tumbled to fresh three-year lows near the 89.50 region and continued exerting downward pressure on the major.

Meanwhile, a modest uptick in crude oil prices provided an additional boost to the commodity-linked currency - Loonie, which along with possibilities of some trading stops being triggered on a decisive break below the 1.2400 handle further aggravated the selling pressure and collaborated to the pair's sharp fall through the mid-European session.

Currently struggling below mid-1.2300s, fresh monthly lows, traders now look forward to second-tier US economic data and the weekly US crude oil inventories data for some immediate respite for the bulls.

Technical levels to watch

A follow-through selling pressure has the potential to continue dragging the pair further towards the 1.2300 handle en-route its next major support near mid-1.2200s. On the upside, any meaningful recovery attempts might now confront fresh supply near the 1.2400 handle, above which a bout of short-covering could lift the pair back towards 1.2425-30 hurdle.