USD/CAD drops to lows near 1.2780 ahead of US CPI

• The pair drops to fresh 2-week lows around 1.2780 today.
• Higher oil prices, softer buck collaborate with the decline.
• US CPI figures for the month of April next of relevance.

The softer tone in the greenback plus higher oil prices is now prompting USD/CAD to test fresh multi-day lows in the 1.2780 region.

USD/CAD now looks to US data

The pair is down for the second session in a row on Thursday, coming under renewed and strong selling pressure via soaring crude oil prices, profit taking in the greenback and underpinning prices in the commodity complex, while expectations of further tightening by the Bank of Canada remain pretty much the same.

In fact, prices of the West Texas Intermediate climbed to fresh multi-year tops beyond the $71.00 mark, as markets continue to adjust to the potential consequences of the recent US withdrawal from the Iran nuclear deal. The up move in prices comes within the broader better mood in the commodity complex, all supportive of a stronger CAD.

Later in the day, US inflation figures gauged by the CPI are due for the month of April along with the usual Initial Claims and the Monthly Budget Statement. In Canada, New Housing Price Index is only due.

USD/CAD significant levels

As of writing the index is losing 0.43% at 1.2798 and a break below 1.2776 (low May 10) would open the door to 1.2722 (38.2% Fibo of the 2017 drop) and then 1.2644 (200-day sma). On the upside, the initial hurdle aligns at 1.2857 (10-day sma) seconded by 1.2927 (50% Fibo of the 2017 drop) and finally 1.2999 (high May 8).