• The USD builds on the recent steady climb despite a pull-back in US bond yields.
• Weaker oil prices undermine Loonie and remained supportive of the positive move.
• Relatively thin economic docket seems unlikely to provide any meaningful impetus.
The USD/CAD pair jumped to one-week tops in the last hour, with bulls now eyeing a follow-through up-move beyond the 1.3200 handle.
A combination of supporting factors helped the pair to catch some aggressive bids on Wednesday and finally break out of its multi-day consolidative range, and build on the recent rebound from over three-month lows set last Friday.
Despite a modest pull-back in the US Treasury bond yields, the US Dollar extended its steady climb for the third straight session and has now recovered all of its losses that came after a dovish FOMC message last week.
This coupled with a weaker tone around crude oil prices failed to lend any support to the commodity-linked currency – Loonie and remained supportive the pair’s sharp intraday up-move back closer to 100-day SMA barrier.
After posting a daily loss of around 1% in the previous session, WTI crude oil languished near one-week lows, just south of mid-$53.00s, and continues to be weighed down by worries over the outlook for the global economy.
It would now be interesting to see if the pair is able to extend the momentum or the current bounce is utilized as a selling opportunity amid relatively thin economic docket, highlighting the only release of Canadian Ivey PMI.
Technical levels to watch
On a sustained move beyond the 1.3200 mark, the pair is likely to aim towards challenging its next support near mid-1.3200s with some intermediate resistance near the 1.3215-0 region. On the flip side, the 1.3150-45 region now seems to protect the immediate downside, which if broken might prompt some fresh weakness and drag the pair back towards challenging the 1.3100 handle.