USD/CAD weakens farther below 1.3400 mark, lowest since June 10

• USD/CAD remained depressed for the fourth consecutive session on Thursday.
• Rising COVID-19 cases, the impasse over fiscal stimulus weighed on the USD.
• Modest gains in oil prices, Wednesday’s Canadian CPI underpinned the loonie.

The USD/CAD pair extended its steady decline through the early European session and dropped to fresh multi-week lows, around the 1.3375-70 region in the last hour.

The pair remained under some selling pressure for the fourth consecutive session and prolonged this week's bearish break below the key 1.3500 psychological mark. The downtick was sponsored by a combination of factors – sustained US dollar selling bias and bullish crude oil prices.

Worries that the second wave of coronavirus outbreak in the US could delay the economic recovery kept the USD bulls on the defensive. This coupled with the fact that US policymakers have been struggling to reach consensus on a $3 trillion stimulus package further weighed on the greenback.

On the other hand, the Canadian dollar was being supported by Wednesday's data that showed domestic annual inflation in June posted its biggest acceleration in more than nine years. This coupled with a positive tone around oil prices further underpinned the commodity-linked loonie.

Apart from this, the downfall could further be attributed to some follow-through technical selling below the 1.3400 horizontal support. However, oversold conditions on intraday charts might hold investors from placing aggressive bearish bets and help limit further losses.

Market participants now look forward to the release of the US Initial Weekly Jobless Claims. This, along with developments surrounding the US fiscal stimulus might influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch