USD/CAD drops below 1.3800 as USD weakens on QE headlines

• NY Fed said it will offer additional $500 billion in one-month repo.
• US Dollar Index retreats below 97.50 area on this headline.
• WTI erases more than 5% to weigh on CAD.

The USD/CAD pair came under sudden bearish pressure in the last hour and erased more than 150 pips after the NY Fed announced it will introduce new repo operation. After slumping to 1.3707 with the initial reaction, the pair erased its losses and was last seen trading near 1.3770, where it was virtually flat on the day.

USD weakens on NY Fed's announcement

The NY Fed said it will offer $500 billion in a three-month repo operation at 1:30 pm EST on Thursday and another $500 billion in a one-month operation on Friday. The US Dollar Index, which advances to a fresh two-week high of 98.31 earlier in the day, reversed its direction and was last seen at 97.37, where it was still up 0.78% on a daily basis.

On the other hand, crude oil prices continue to suffer losses amid oversupply concerns and dismal demand outlook in the face of globally surging coronavirus infections numbers. With the barrel of West Texas Intermediate losing nearly 6% and trading below the $32 handle, the commodity-related CAD seems to be having a tough time preserving its strength.

Technical levels to watch for