USD/CAD drops to fresh weekly lows, finds support ahead of 1.27

• Consumer inflation in Canada rises to highest level since January.
• Canadian retail sales beats expectations.
• Third quarter GDP growth eases to 3.2% in the U.S.

The USD/CAD pair came under a renewed pressure in the early NA session and dropped to its lowest level since December 14 at 1.2719 before retaking a portion of its recent losses. As of writing, the pair was trading at 1.2760, losing 0.6% on the day.

Today's data from Canada showed that retail sales increased by 1.5% on a monthly basis in October following September's dismal 0.2% rise and surpassed the market estimate of 0.3%. More importantly, annual inflation, measured by the CPI, inched higher to 2.1% from 1.4%, boosting the demand for the loonie as this reading is likely to allow the BoC to continue its tightening strategy.

On the other hand, the third estimate of the third quarter real GDP growth in the U.S. remained unchanged at 2.1% on a quarterly basis, however, eased to 3.2% from 3.3% on a yearly basis. Although the initial reaction to the data pulled the US Dollar Index back below the 93 mark, the greenback was able to gain traction, and the index was last seen at 93.02, adding 0.1% on the day.

In the meantime, the barrel of WTI failed to hold above the $58 mark on Thursday and is now losing 0.6% on the day at $57.75, limiting the pair's downside.

Technical outlook

The pair faces the initial support at 1.2720 (daily low) followed by 1.2625 (Dec. 5 low) and 1.2500 (psychological level). On the upside, resistances align at 1.2785 (50-DMA), 1.2830 (200-DMA) and 1.2920 (Dec. 19 high). The RSI indicator on the daily chart broke below the 50 mark with today's fall, suggesting that the bearish momentum is gathering strength.