USD/CAD extends gains to fresh 6-day high at 1.2565

Eren Sengezer FXStreet

The USD/CAD pair stretched its bullish move during the NA session to its highest level since July 21 at 1.2565. As of writing, the pair was trading at 1.2555, up 0.88% on the day.

Although the US Dollar Index lost its momentum in the last couple of hours to ease from its session peak of 93.90 to 93.70 area, it's still up 0.45% on the day. On the other hand, crude oil prices remained relatively calm on Thursday following three straight days of strong gains and the barrel of West Texas Intermediate settled at $49, gaining $0.25 on the day.

The pair's latest upsurge seems to be triggered by a statement released by the Congressional Republicans, which highlighted that VAT and border-adjustment tax ideas were dead and hurt the demand for the loonie. "While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform," politicians working on the tax plan said in the statement.

Mexican peso also took a hit from the announcement and the USD/MXN pair pushed higher to a fresh daily top at 17.7428.

Technical outlook

With this last move, the RSI on the daily graph moved above the 30 mark for the first in two-weeks, suggesting that the pair finally corrected its oversold-ness. 1.2600 (psychological level) could be seen as the first technical hurdle for the pair ahead of 1.2690 (Jul. 18 high) and 1.2740 (Jul. 14 high). On the downside, supports are located at 1.2500 (psychological level), 1.2415 (daily low) and 1.2365 (Jun. 2, 2015, low).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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