USD/CAD flirts with highs near 1.3160 amid US dollar’s demand

The USD/CAD pair posts small gains above 1.3150 in European trading, looking to extending its three-day recovery from five-week lows of 1.3097.

The bulls remain in control and challenge Wednesday’s high of 1.3163, in the wake of the resurgent US dollar demand seen across the board, as investors scurry up to the safe-haven amid diminishing hopes of a US fiscal stimulus package.

Stocks dropped and the greenback caught a fresh bid-wave in the US last session after Treasury Secretary Steve Mnuchin explicitly said that a fiscal deal before the November 3 election is difficult.

However, the gains in the major remained capped by the 2% rally in the US oil. WTI surged past the $41 mark on Thursday after OPEC and its allies (OPEC+) reportedly complied with the oil output cuts in September. Meanwhile, a bigger-than-expected draw in the US crude stockpiles also added to oil’s upside, in turn, offering some support to the resource-linked Loonie.

Looking ahead, the weekly US Jobless Claims data remain in focus for fresh cues on the US labor market recovery. Meanwhile, the Canadian ADP jobs data, sentiment on Wall Street and Bank of Canada (BOC) Deputy Governor Timothy Lane’s speech will be also closely eyed for fresh cues on the CAD pair.

USD/CAD: Technical levels

FXStreet’s Analyst Anil Panchal notes, “following the downside break of 1.3125, the 1.3100 threshold may offer an intermediate halt during the south-run towards the previous month’s bottom surrounding the 1.3000 psychological magnet. On the contrary, an upside clearance of the pattern’s resistance line, at 1.3168 now, can escalate the recovery moves towards the 200-HMA level of 1.3207.”

USD/CAD: Additional levels