USD/CAD hovers around 1.2780, downside remains favored on risk-on mood and firmer oil

• USD/CAD is oscillating below 1.2800 as DXY has lost its strength amid the soaring market mood.
• Investors have underpinned loonie against the greenback despite weak Canada Retail Sales.
• Higher oil prices have empowered the Canadian dollar.

The USD/CAD pair is displaying back and forth moves in a narrow range of 1.2768-1.2784 and is eyeing to decline towards the monthly lows at 1.2714. The asset has remained in the grip of the bears after failing to sustain above the psychological resistance of 1.3000 last week.

A breakdown in the asset is expected after a decisive slippage below weekly lows at 1.2766 amid weakness in the greenback bulls. A recorded underperformance in the Gross Domestic Product (GDP) numbers on Thursday has diminished the demand for the greenback. The annualized GDP slipped further to -1.5% vs. the estimate of -1.3%.

Vulnerability in the US dollar index (DXY) has also impacted the loonie pair. The US dollar index (DXY) has tumbled below 102.00 as investors have underpinned the positive market sentiment. This has diminished the safe haven’s appeal and fresh monthly lows are expected from the asset.

On the loonie front, investors have ignored the slippage in the Retail Sales, as reported on Thursday. The Retail Sales landed at 0% against the prior print of 0.2% and the forecasts of 1.4%. Meanwhile, the oil prices settled above $110.00 firmly on Thursday after the European Union (EU) forces Hungary to withdraw its opposition to banning Russian oil imports. Higher oil prices will fetch more fund inflows into the loonie region.