The USD/CAD pair maintained its offered tone through the mid-European session and dropped to fresh six-week lows, around the 1.2435 region in the last hour. The pair prolonged last week's post-BoC sharp retracement slide from levels just above the mid-1.2600s and witnessed some follow-through selling on the first day of a new trading week. The US dollar selling bias remained unabated through the first half of the trading action, which, in turn, was seen as a key factor that continued exerting some pressure on the USD/CAD pair.
In fact, the key USD Index dropped to the lowest level since early March amid firming expectations that the Fed will keep interest rates low for a longer period. On the other hand, a more hawkish Bank of Canada extended some support to the Canadian dollar. It is worth reporting that the BoC brought forward its guidance for the first interest rate hike to the second half of 2022.