USD/CAD hits 2-1/2-week tops and retreats, still comfortable above 1.28 mark

Haresh Menghani FXStreet

• Short-end US bond yields help negate bullish oil prices.
• Subdued USD price action fails to lend any support.
• Canadian/US data awaited for fresh impetus.

The USD/CAD pair reversed an early dip to the 1.2800 handle and jumped to near three-week tops during the early European session on Tuesday.

A modest pickup in the short-end (2 & 5-yrs) US Treasury bond yields, amid firming December Fed rate hike expectations helped negate a goodish up-move in crude oil prices, which tends to benefit the commodity-linked currency - Loonie, and provided a minor boost.

Today's up-move could also be attributed to some follow-through technical buying, following yesterday's bullish break through the key 1.2800 hurdle.

Bulls, however, seemed lacking strong conviction amid subdued US Dollar price action, amid persistent worries over the fate of a long-awaited US tax cut legislation.

Traders now look forward to today's economic docket, featuring the relase of Canadian Wholesale Sales and existing home sales data from the US, in order to grab some short-term trading opportunities.

Technical levels to watch

Bulls would be eyeing for a clear breakthrough 1.2845-50 immediate hurdle, above which the pair is likely to dart towards 1.2880 supply zone en-route the 1.2900 handle.

On the flip side, the 1.2800 handle now becomes an immediate support to defend, which if broken could prompt some additional profit-taking slide towards 1.2770 horizontal level ahead of the 1.2730 strong support.

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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