USD/CAD slides further below mid-1.2700s amid softer USD/uptick in oil prices

• USD/CAD met with a fresh supply on Wednesday and once again failed near the 1.2780-1.2785 area.
• An uptick in crude oil prices underpinned the loonie and exerted pressure amid subdued USD demand.
• A generally positive risk tone turned out to be a key factor that weighed on the safe-haven greenback.

The USD/CAD pair extended its steady intraday descent through the early European session and dropped to a fresh daily low, around the 1.2725 region in the last hour.

The pair continued with its struggle to make it through the 1.2780-1.2785 supply zone and came under some renewed selling pressure on Wednesday. A generally positive tone around the equity markets weighed on the safe-haven US dollar and acted as a headwind for the USD/CAD pair. Apart from this, an uptick in crude oil prices underpinned the commodity-linked loonie and attracted fresh selling around the major.

The fact that sanctions on Russia were not as bad as feared helped ease the nervousness over the situation in Ukraine and helped ease the nervousness over the situation in Ukraine. This, in turn, boosted investors' confidence and drove flows away from traditional safe-haven assets. That said, the risk of an imminent Russian invasion of Ukraine kept a lid on the market optimism.

Russian President Vladimir Putin upped the ante on Monday by recognizing two breakaway regions in eastern Ukraine as independent entities and allowing troops to enter the area to maintain peace. Moreover, Russia's upper house voted in favour of giving Putin the authority to deploy forces abroad. This lifted crude oil prices, which benefitted the Canadian dollar and weighed on the USD/CAD pair.

The mixed fundamental backdrop might hold back traders from placing aggressive directional bets amid absent relevant market-moving economic releases, either from the US or Canada. That said, fresh developments surrounding the Russia-Ukraine saga will influence the USD. This, along with oil price dynamics, should produce some meaningful trading opportunities around the USD/CAD pair.

Technical levels to watch