USD/CAD inter-markets: above 1.3100, should be eying 1.3200 May high
|Brexit led global risk-aversion has been supportive for the safe-haven demand for the US Dollar and denting demand for commodity-linked, high yielding currencies - like the Canadian Dollar, with the USD/CAD pair surging over 300-pips in a single trading session on Friday.
The pair, however, has failed to build on to its gains and decisively move above 100-day SMA resistance, around 1.3100 handle, despite of weaker crude oil prices and broadly strengthening US Dollar. The ongoing recovery for the USD/CAD pair could also be attributed to the current down-leg in crude oil prices, with the WTI crude oil now trading well below $47.00/barrel mark.
On Friday, a sudden drop in the US 10-years treasury yields, led by the unexpected outcome of the Brexit referendum, and a gush of flight to safety was seen supportive for the pair's sharp up-surge. Additional up-move, however, was restricted by a sharp slide in the Canadian 10-years treasury yields, which now seems to move in tandem with US 10-years treasury yields.
Looking at the current dynamics, most of the intrinsic are pointing towards further upside momentum for the pair in the near-term with the only factor restricting additional bullish momentum being the declining Canadian 10-year treasury yields. Hence, a slight improvement in the Canadian treasury yields would turn conditions favorable and assist the USD/CAD pair to extended its recovery trend beyond 100-day SMA resistance around 1.3100 region, towards testing May swing highs resistance around 1.3190 level.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.