USD/CAD plunges to fresh 14-month lows, below 1.26 handle

Having faced rejection near the 1.2700 handle, the USD/CAD pair resumed with its well established bearish trend and plunged to fresh 14-month lows below the 1.2600 handle.

The US Dollar selling pressure picked upon on Tuesday after two more Senate Republicans said that they would vote against an alternative health-care bill, which raised fresh doubts over the US President Donald Trump's ability to push through his promised pro-growth agenda.

   •  US Pres. Trump: Let ObamaCare fail and then come together and do a great healthcare plan

Adding to this, a strong rally in oil prices, with WTI crude oil now holding above $46.00 mark, provided an additional boost to the commodity-linked currency - Loonie, and also collaborated to the pair's slide to the lowest level since early May 2016.

Meanwhile, fading expectations of any additional Fed rate hike action in 2017, and a hawkish BOC twist, further reinforces the prevalent bearish bias around the major and hence, a drop to the key 1.25 psychological mark now seems a distinct possibility.

   •  USDCAD retains a heavy overall feel - Scotiabank

In absence of any major market moving economic releases on Tuesday, broader market sentiment surrounding the greenback would continue to act as an exclusive driver of the pair's movement through NY trading session.

Technical levels to watch

Immediate support is pegged near 1.2560-55 area, below which the fall seems more likely to get extended towards 1.2520 intermediate support ahead of the 1.25 handle. On the upside, any recovery attempts back beyond the 1.2600 handle might now confront resistance near 1.2625-30 region, above which the pair could make a fresh attempt towards reclaiming the 1.2700 round figure mark.