USD/CAD digesting overnight strong gains to 5-week tops

The USD/CAD pair was seen consolidating overnight strong gains to 5-week tops and traded with mild bearish bias around 1.3475 region.

A sharp drop in crude oil prices, with WTI crude oil falling more than 3.5% back closer to $50.00/barrel mark on Wednesday, weighed heavily on the commodity-linked currency - Loonie. Adding to this, a modest greenback recovery further aggravated the up-move and lifted the pair to its highest level since mid-March. 

With the US Dollar failing to extend previous session's recovery move from 3-week lows, a mild up-tick in oil prices, in wake a reduction in the US commercial crude stockpiles, seems to have collaborated towards capping the pair just below the key 1.35 psychological mark, at least for the time being. 

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Against the backdrop of nearly 250-pips of up-surge over the past three days, today's price-action could be categorized as consolidative phase. Traders now look forward to the US economic docket that includes - usual weekly jobless claims and Philly Fed Manufacturing Index, and speech by the US Treasury Secretary Steven Mnuchin for some fresh impetus.

Technical levels to watch

Immediate support is pegged near mid-1.3400s, below which the pair is likely to extend the corrective slide towards 1.3420 intermediate support ahead of the 1.3400-1.3390 strong horizontal support. On the upside, the 1.3500 handle remains immediate hurdle, which if cleared decisively has the potential to lift the pair beyond yearly highs resistance near 1.3515 level (March 9) towards testing its next major resistance near 1.3575-80 zone.