USD/CAD drops to low-day lows under 1.2540

• Rally in crude oil prices favors the loonie.
• A correction of the US dollar weakens USD/CAD.

The USD/CAD broke under 1.2560 and fell to 1.2519, reaching the lowest level since Friday. It then bounced to the upside toward the 1.2540 area. The slide took place amid a rally in crude oil prices and a correction of the greenback.

Equity prices turned to the upside and boosted further crude oil prices. The WTI barrel jumped toward the $69.00 area, and is up by 2.50%. The rally favored the loonie that printed fresh highs versus the dollar and also against NZD and AUD.

In Wall Street the Dow Jones is up 0.35% and the Nasdaq drops by 0.65%. US yields reach fresh daily highs with the 10-year at 1.346%, a new weekly top. Despite higher yields, the greenback weakened. The DXY is off highs, up by just 0.08%, still above 93.00.

Strong barrier under 1.2590

The USD/CAD rose during the Asian session and then on European hours to test the 1.2590 area but failed to break higher and lost momentum. The zone between 1.2590 and 1.2600 is a critical resistance and a close above could open the doors to more gains.

On the flip side, at 1.2515 a short-term uptrend line is seen. A break lower should point to more losses. The next strong support stands at 1.2475.

Technical levels