USD/CAD drops below 1.2400, approaches multi-year lows

• USD/CAD tumbles as Lo0nie outperforms during the American session.
• Pair remains under pressure below 1.2400, looking to the 2021 low at 1.2364.

The USD/CAD broke below 1.2450 and tumbled to 1.2382, reaching the lowest level since March 18. It remains near the low, with the Canadian dollar stronger across the board, outperforming during the American session.

The loonie gained momentum across the board at the beginning of the week after posting mixed results over the previous five days. It appears to be finally reacting to last week's Bank of Canada meeting when it announced a tapering of its purchase program.

Over the last hours, a rebounded in crude oil prices also offered some support to the Canadian dollar. The WTI barrel eared losses, rising from $60.65 to $62.00. The DXY is trading modestly higher, around 90.85, as the greenback rises, particularly against the euro and the yen.

From a technical perspective, USD/CAD bearish momentum has intensified over the last hours, and a test of the YTD low at 1.2363 (March 18 low) is on the card. A break lower would see the lowest prices since January 2018. A recovery above 1.2400 would alleviate the pressure. Still, while below 1.2650, the perspective would favor the loonie.

Technical levels