USD/CAD drops to mid-1.2500s, lowest since Oct. 20

   •  Bearish slide extends for the seventh straight session.
   •  Weighed down by persistent USD weakness.
   •  Bullish oil prices add to the downward pressure.

The USD/CAD pair extended overnight bearish break below 100-day SMA support and has now dropped to mid-1.2500s, its lowest level since Oct. 20.

The pair remained under some selling pressure for the seventh straight session and was being pressurized by persistent US Dollar selling bias, led by the recent slide in the US Treasury bond yields. Adding to this, the prevailing bullish run-up in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and kept exerting downward pressure on the pair.

The downfall could also be attributed to some technical selling, especially after the latest bearish break down below 100-day SMA support near the 1.2600 handle. "The sideways trend on USD/CAD has been invalidated by the exchange rate breaking on the downside. Strong technical support of C$1.2720 represented by 38.2% Fibonacci retracement of long-term appreciation of Loonie towards C$1.2097 cyclical low and peaking at C$1.2920 opened the way lower" notes Mario Blascak, European Chief Analyst at FXStreet.

There isn't any market-moving economic data due for release on Friday and hence, technical factors, along with the USD price dynamics would remain key determinants of the pair's momentum on the last trading day of the year.

Technical outlook

Mario Blascak writes: "The daily chart indicates that the USD/CAD is moving lower for the seventh day in a row, bringing the Slow Stochastics indicator to the Oversold territory with USD/CAD facing 100-day moving average support at around C$1.2600 first before targeting lower levels at C$1.2470 represented by 28.2% Fibonacci retracement. Technical oscillators like Momentum and MACD all pointing downwards indicating further potential in a current move lower."