USD/CAD jumps to fresh daily highs above 1.25 as USD gains traction

  • FOMC sees the possibility of a steeper rate hike path in 2018.
  • DXY edges higher toward 92.
  • WTI futures settle at $61.63/bbl.

The USD/CAD, which struggled to pull away from the 1.25 handle during the first half of the day, advanced to a fresh daily high at 1.2553 as the buck gathered strength against its rivals after the FOMC published the minutes of its December meeting. At the moment, the pair is trading at 1.2540, up 0.22% on the day.

The FOMC minutes showed that policymakers thought that fiscal stimulus and easy financial market conditions in 2018 could boost output too much and could force the Fed to tighten the policy at a faster-than-expected rate. Nonetheless, members agreed that the timing and size of future adjustments to the target range for the federal funds rate will continue to depend on the inflation data. After spiking up to a session top at 91.97, the US Dollar Index eased back a little and was last seen up 0.35% at 91.88.

Despite this recent upsurge, however, the pair could have a difficult time preserving its bullish momentum as the commodity-sensitive loonie is likely to find demand amid rising crude oil prices. Ahead of the weekly API data from the United States, the barrel of West Texas Intermediate settled at $61.63, up $1.26 on the day. 

Technical levels to consider

1.2500 (psychological level/daily low) remains as a critical support for the pair ahead of 1.2450 (Oct. 19 low) and 1.2410 (Sep. 29 low). On the upside, resistances could be seen at 1.2610 (100-DMA), 1.2700 (psychological level) and 1.2750 (50-DMA/20-DMA).