USD/CAD tumbles to fresh seven-month lows under 1.3050 as DXY falls to lowest in two years

• USD/CAD extends slide, eyes 1.3000 and December lows at 1.2950.
• DXY about to test 92.00, trading at the lowest since April 2018.  

The USD/CAD is falling for the fifth day in a row and during the American session accelerated the decline. The pair dropped to 1.3021, reaching the lowest level since January 2020. As of writing, it trades at 1.3035/40, down 50 pips for the day.

The key driver in the USD/CAD slide continues to be USD weakness. The greenback lost key levels last week after the Federal Reserve announces its new framework.

The US Dollar Index (DXY) is falling 0.35%, trading slightly above 92.00, at the lowest level in two years. Despite losing ground in the G10 space, the greenback is rising versus most emerging market currencies, showing that an improvement in risk appetite is not driving price action.

Technical levels

On the flip side, a consolidation below 1.3025 in USD/CAD would expose the 1.3000 area and below attention would turn to 1.2945/50 (December 2019 / January 2020 lows). Resistance levels are now seen at 1.3075, 1.3130 (Aug 19, 24 & 26 low) and 1.3165. The short-term bearish bias will likely remain intact while below the downtrend line seen today at 1.3150.