USD/CAD erases gains, back to the 1.2700 area as the US dollar tumbles

• A sharp reversal of the US dollar near London fix sends DXY back below 90.50.
• USD/CAD drops 60 pips from the peak, back to the 1.2700 zone.

The loonie recovered sharply versus the US dollar during the American session and ahead of a long weekend. The USD/CAD peaked at 1.2763 and then turned to the downside falling more than 60 pips. It dropped to 1.2702 and it is hovering around 1.2705/10, still up for the day but now pointing to the downside.

The reversal took place amid a big drop of the greenback. The DXY fell from four-day highs at 90.72 to 90.42, earing all gains. US yields pulled back from the daily highs. The move took place ahead of the London fix and triggered a sharp reversal in gold. Crude oil continues to move higher and printed fresh daily high. The WTI stands at $58.76, up 1.60%, near the recent peak.

The rally in crude oil, the revels of the greenback pushed USC/CAD back below the critical resistance near 1.2740 and now is attempting to break under 1.2700. The pair is about to end the week with a negative tone.

Still, a weekly close clearly under 1.2670 seems needed in order to open the door to new cycle lows. The rejection from above 1.2750 shows the greenback's difficulties to stage a recovery, confirming the current bearish bias.

Technical levels