USD/CAD drops to fresh 1-1/2 month lows despite upbeat US PPI

   •  Hotter-than-expected US PPI/surging US bond yields fail to revive USD demand.
   •  Bullish oil prices offset downbeat Canadian data and continue to underpin Loonie.

The USD/CAD pair lost some more ground during the early NA session and is currently placed at fresh 1-1/2 month lows, around mid-1.2600s.

The pair met with some fresh supply and broke down of its European session bearish consolidation phase despite a hotter-than-expected US PPI print, coming in to show m-o-m price rise of 0.3% in March as against 0.1% expected. 

Adding to this, the core reading, which excludes food and energy prices, and yearly rates also surpassed expectations but did little to revive the US Dollar demand. Even the ongoing upsurge in the US Treasury bond yields failed to lend any support and stall the pair's downfall to its lowest level since Feb. 26. 

Meanwhile, traders seemed to have largely ignored mixed Canadian housing market data, with bullish crude oil prices underpinning demand for the commodity-linked currency - Loonie and weighing on the major. 

With today's key US/Canadian economic data out of the way, the USD/oil price dynamics might continue to act as key determinants of the pair's momentum ahead of Wednesday's US consumer inflation figures and the latest FOMC meeting minutes.

Technical levels to watch

Any subsequent weakness is likely to find some support at the very important 200-day SMA, currently near the 1.2635 region, which if broken might continue dragging the pair further towards the 1.2600 handle. On the upside, the 1.2695-1.2700 region (100-day SMA) now becomes immediate resistance, above which a bout of short-covering could lift the pair back towards 1.2740-50 resistance (50-day SMA).