USD/CAD bulls moving in to test above 1.3500

USD/CAD is edging higher in Asia as the US Dollar firms. At the time of writing, USD/CAD is trading at 1.3511 and has traveled between a low of 1.3486 and a high of 1.3512. 

The Loonie has been under pressure with a drop in oil prices as well while, at the same time, the Bank of Canada Governor Tiff Macklem stopped short of endorsing the market's recent move to price in another interest rate hike by the central bank.

Reuters reported that Macklem suggested April's inflation increase - the first in 10 months - was an anomaly and said consumer prices would continue to come down, in comments following the release of the BoC's financial system report.

Meanwhile, futures are pricing in a roughly 60% chance of the central bank resuming interest rate hikes by July, down from 80% before Macklem spoke.

Elsewhere, the optimism over debt ceiling talks in Washington has raised expectations of higher-for-longer interest rates. This has led to the US Dollar firming to a near a six-month peak against the yen on Friday on the back of rising US Treasury yields.

Reuters reported that President Joe Biden and top US congressional Republican Kevin McCarthy earlier this week underscored their determination to strike a deal soon to raise the government's $31.4 trillion debt ceiling, with hopes of finalizing a deal after Biden returns from the Group of Seven meeting in Japan on Sunday.

USD/CAD technical analysis

The bulls will be looking to guard the support area near the 50% mean reversion mark with 1.3600 eyed.