• USD/CAD drops back below 1.2600, tracking the pullback in the US dollar.
• The oil price rebound also lends support to the major.
• USD/CAD turns lower towards 21-DMA after rejection above 200-DMA.

USD/CAD is holding lower ground below 1.2600, undermined by the renewed downside in the US dollar against its major peers.

The pullback in the dollar from two-year peaks could be mainly attributed to the steep correction in the USD/JPY pair after it faced rejection just below the 129.50 psychological barrier.

Meanwhile, the rebound in the price of WTI on lower US inventories and OPEC+ production levels also added to the weight on the major.

All eyes now remain on the Canadian Consumer Price Index (CPI) data and the Fed’s Beige Book to indicate the further direction in the pair.

Technically, USD/CAD is turning lower towards the horizontal 21-Daily Moving Average (DMA) support at 1.2554 after having failed to find acceptance above the mildly bullish 200-DMA over the past five trading days. The 200-DMA currently stands at 1.2628.

The 14-day Relative Strength Index (RSI) is pointing lower, moving further below the midline, allowing room for more declines.

A sustained move below the 21-DMA level could expose the April 14 lows of 1.2521, below which the 1.2500 round level could be put to test.

USD/CAD: Daily chart

Only a daily closing above the 200-DMA will help initiate a fresh advance to challenge the descending 50-DMA at 1.2652.

Further up, the 100-DMA at 1.2681 will come into play should the recovery momentum gather steam.

USD/CAD: Additional levels to consider