USD/CAD reverses a dip to sub-1.3300 level, still in the red ahead of US/Canadian data
| • Combination of negative forces exerts some fresh downward pressure on Friday.
• The USD remains on the defensive amid a modest slide in the US bond yields.
• Bullish run in oil prices underpin Loonie and add to the prevalent selling bias.
The USD/CAD pair quickly reversed an early European session dip to sub-1.3300 level and trimmed a part of its daily losses back closer to near two-week lows.
The pair traded with a bearish bias for the fifth session in the previous six, albeit bulls showed resilience at lower levels and once again helped the pair to find some support near the 1.3290-85 region.
The US Dollar failed to capitalize on the overnight attempted bounce and remained on the defensive on the last trading day of the week amid a modest downtick in the US Treasury bond yields.
This coupled with the ongoing bullish run in crude oil prices provided an additional boost to the commodity-linked currency - Loonie and further collaborated to the weaker tone surrounding the major.
The downside, however, remained limited, with the pair recovering around 20-25 pips from daily lows to currently trade around the 1.3310-15 region, though lacked any obvious fundamental catalyst.
Hence, it would be prudent to wait for a strong follow-through recovery before confirming that the pair might have actually bottomed out in the near-term and positioning for any near-term positive move.
Moving ahead, today's release of Canadian manufacturing sales, along with second-tier US economic data will now be looked upon for fresh impetus and in order to grab some short-term trading opportunities.
Technical levels to watch
Immediate resistance is pegged near the 1.3335-40 region, above which the pair is likely to aim towards reclaiming the 1.3400 round figure mark. On the flip side, the 1.3300-1.3290 area might continue to protect the immediate downside, which if broken might turn the pair vulnerable to accelerate the fall further towards 50-day SMA support, around the 1.3260 region.
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