USD/CAD drops further below 1.2800 handle

The USD/CAD pair remained well offered to currently trade near session low level as oil continues to build on to its strength further beyond $49.00 handle.

The Canadian Dollar is benefitting from rising crude oil prices while the greenback continues to slide on global risk-on rally. Weakening US Dollar is extending support to commodity prices, like oil, thus boosting demand for commodity-linked currencies, like CAD, and eventually dragging the USD/CAD major lower for third consecutive day.

Next in focus would be the Fed Chair Janet Yellen's testimony, later during NY session, which might provide some respite to US Dollar bulls and assist the pair to recover some lost ground.

From technical perspective, the pair is now down over 300-pips in less than four trading sessions from a multi-week high level of 1.3085 touched in the previous week and is now heading towards near-term oversold conditions on hourly charts, warranting near-term consolidation or a bounce-back from lower levels.

Technical levels to watch

Weakness below 1.2770-60 immediate horizontal support is likely to push the pair further towards 1.2700 round figure mark support. A sustained break below 1.2700 handle would negate possibilities of any further recovery for the pair and turn it vulnerable to retest recent closing lows support near 1.2525 area, with 1.2600 round figure mark acting as intermediate support.

On the flip side, the pair need to build on to its momentum above 1.2800 handle resistance, which might assist the pair to extend the recovery further towards 1.2870 horizontal resistance ahead of the 1.2900 round figure mark and a major resistance near 1.2950-60 zone.