USD/CAD clings to gains near two-week high, above 1.3500 amid modest USD strength

USD/CAD climbs to a nearly two-week high and draws support from a combination of factors.
The recent slump in Crude Oil prices continues to undermine the Loonie and acts as a tailwind.
Bets for more Fed rate hikes and a softer risk tone lift the USD back closer to the weekly high.

Haresh Menghani FXStreet

The USD/CAD pair gains traction for the third successive day on Friday, also marking the fifth day of a positive move in the previous six, and touches a nearly two-week high, around the 1.3535 region during the first half of the European session.

Crude Oil prices languish near the monthly low amid worries that a deeper global economic downturn will dent fuel demand and undermines the commodity-linked Loonie. Apart from this, signs of cooling consumer inflation in Canada undermine the Canadian Dollar and assist the USD/CAD pair to build on its recent bounce from the 1.3300 mark, or a two-month low touched last Friday. This, along with the emergence of fresh US Dollar (USD) buying acts as a tailwind for the major.

In fact, the USD Index, which tracks the Greenback against a basket of currencies, climbs back closer to the weekly high amid growing acceptance of further policy tightening by the Federal Reserve (Fed). In fact, the markets seem convinced that the US central bank will hike rates by 25 bps in May and have been pricing in a small chance of another rate hike in June. This, along with a generally weaker tone around the equity markets, further benefits the Greenback's safe-haven status.

Friday's follow-through move-up could further be attributed to some technical buying above the 1.3500 psychological mark. This, along with the aforementioned fundamental backdrop suggests that the path of least resistance for the USD/CAD pair is to the upside. Traders now look to the flash US PMI prints, which along with the US bond yields and the broader risk sentiment, will drive the USD demand. Apart from this, Oil price dynamics should provide some impetus to the major.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3521
Today Daily Change	0.0044
Today Daily Change %	0.33
Today daily open	1.3477

Trends
Daily SMA20	1.349
Daily SMA50	1.3563
Daily SMA100	1.3529
Daily SMA200	1.3409

Levels
Previous Daily High	1.349
Previous Daily Low	1.3449
Previous Weekly High	1.3554
Previous Weekly Low	1.3301
Previous Monthly High	1.3862
Previous Monthly Low	1.3508
Daily Fibonacci 38.2%	1.3474
Daily Fibonacci 61.8%	1.3464
Daily Pivot Point S1	1.3454
Daily Pivot Point S2	1.343
Daily Pivot Point S3	1.3412
Daily Pivot Point R1	1.3495
Daily Pivot Point R2	1.3513
Daily Pivot Point R3	1.3536

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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