USD/CAD hits weekly lows under 1.2900 amid risk appetite

• Loonie gains momentum on higher crude oil and as stocks rally.
• USD/CAD moves away from the 1.3000 area.
• Consolidation below 1.2900 to confirm bearish bias.

The USD/CAD broke to the downside during the American session as US stocks soar and as crude oil prices jump. The pair dropped to 1.2899, hitting the lowest level in a week.

There is no bad data for stocks

The decline in US Consumer Sentiment to the lowest on record did not weaken the rally Wall Street. The Dow Jones is rising by 2.12% and the Nasdaq by 2.14%. The improvement in market sentiment is also driving crude oil prices to the upside. The WTI barrel is at multi-day up almost 4%.

The combination of risk appetite, higher crude oil prices and a weaker dollar are pushing USD/CAD to the downside on Friday. On a wider perspective, analysts at MUFG Bank warn the loonie could be hurt more than other currencies by intensifying global growth fears and from negative spill-over risks from higher rates.

Testing 1.2900

On Thursday, USD/CAD was testing the critical resistance around 1.3000. It failed to break higher and pulled back. Currently, is it trading under the 1.2900, a relevant support. A consolidation below should open the doors for an extension of the move lower targeting initially 1.2860.

The bias points to the downside in the short-term and it would be reinforced with a break under 1.2580. The dollar needs to break above 1.3000 to strengthen.

Technical levels