• USD/CAD remains under some selling pressure for the fourth successive day on Thursday.
• Expectations for an imminent Fed rate-hike pause weigh on the USD and exert pressure.
• A modest pullback in Oil prices undermines the Loonie and helps limit any further losses.

The USD/CAD pair continues to drift lower for the fourth successive day on Thursday and drops to a nearly two-month low heading into the North American session. The pair is currently placed just below the 1.3400 mark, with bearish now awaiting a subsequent breakthrough the very important 200-day Simple Moving Average (SMA) before placing fresh bets.

The US Dollar (USD) selling remains unabated for the third straight day amid expectations that the Federal Reserve (Fed) is nearly done with its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair. In fact, the markets now seem convinced that the US central bank will pause its monetary tightening after hiking one last time next month and the bets were reaffirmed by the softer-than-expected US Producer Price Index (PPI) figures released this Thursday.

According to the data published by the US Bureau of Labor Statistics, the US PPI declined to the 2.7% YoY rate in March from 4.9% previous (revised down from 4.6%). The annual Core PPI, meanwhile, fell to 3.4% during the reported period from 4.5%, matching analysts' estimate. On a monthly basis, the PPI and the Core PPI came in at -0.5% and -0.1%, respectively. This lifted hopes that disinflation is progressing smoothly and open the door for Fed to cut rates during the second half of the year.

Furthermore, the March FOMC minutes showed that several policymakers considered pausing interest rate increases after the failure of two regional banks. This, along with a generally positive tone around the equity markets, continues to weigh on the safe-haven Greenback and is seen dragging the USD/CAD pair lower. That said, retreating Crude Oil prices undermines the commodity-linked Loonie and assists spot prices to defend a technically significant 200-day SMA support, at least for now.

Technical levels to watch