USD/CAD consolidates overnight recovery gains, US CPI awaited

Haresh Menghani FXStreet

• An uptick in the US bond yields underpins the USD demand.
• Subdued oil prices weigh on the commodity-linked Loonie.
• Momentum lacks conviction ahead of US inflation figures.

The USD/CAD pair built on the overnight steady climb from the 1.2800 handle, over one-week lows, and traded with a mild positive bias for the second consecutive session.

With investors looking past Friday's sluggish wage growth data, a modest uptick in the US Treasury bond yields underpinned the US Dollar demand and was seen as one of the key factors lending some support to the major.

Adding to this, a softer tone around crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, remained supportive of the pair's post-NFP rebound.

Bulls, however, seemed lacking conviction and refrained from placing aggressive bets ahead of the latest US consumer inflation figures, which is likely to determine how fast the Fed would raise interest rates in 2018 and eventually provide some fresh directional impetus.

Technical levels to watch

A follow-through buying interest has the potential to continue boosting the pair further towards reclaiming the 1.2900 handle, above which the pair the momentum could further get extended towards 1.2960-65 supply zone.

On the flip side, weakness below 1.2825 level might continue to find some support near the 1.2800 handle, which if broken might turn the pair vulnerable to accelerate the fall further towards its next major support near the 1.2700 round figure mark.

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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