USD/CAD rallies to 1-month tops, fast approaching 1.3400 mark

Resurgent USD demand assisted USD/CAD to rally around 100 pips from daily lows.
The USD stood tall following the release of stronger-than-expected US GDP report.
Tumbling oil prices undermined the loonie and remained supportive of the move.

Haresh Menghani FXStreet

The USD/CAD pair rallied around 100 pips from the daily swing lows and shot to near one-month tops, around the 1.3375-80 region during the early North American session.

Following an early slide to the 1.3280-75 region, the pair witnessed a dramatic turnaround and was being supported by a combination of factors. The US dollar was back in demand amid growing market worries about the potential economic impact of fresh restriction to curb the second wave of the coronavirus infections.

The USD bulls seemed rather unaffected by the uncertainty about the outcome of the US presidential election next week, instead took cues from stronger-than-expected US GDP report. According to the advance estimates, the US economy expanded by 33.1% annualized pace during the third quarter of 2020 as against a growth of 31% anticipated.

Apart from this, a steep decline in crude oil prices undermined demand for the commodity-linked currency – the loonie – and provided an additional boost to the USD/CAD pair. This, coupled with possibilities of some short-term trading stops being triggered above the overnight swing highs, around 1.3335 region, further contributed to the strong momentum.

Meanwhile, technical indicators on hourly charts are already flashing extremely overbought conditions. Hence, any subsequent move up is more likely to confront a stiff resistance near the 1.3410-15 supply zone. That said, some follow-through buying should pave the way for an extension of the bullish trajectory further towards the key 1.3500 psychological mark.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3369
Today Daily Change	0.0045
Today Daily Change %	0.34
Today daily open	1.3324

Trends
Daily SMA20	1.32
Daily SMA50	1.3201
Daily SMA100	1.3337
Daily SMA200	1.3544

Levels
Previous Daily High	1.3334
Previous Daily Low	1.318
Previous Weekly High	1.3204
Previous Weekly Low	1.3081
Previous Monthly High	1.3421
Previous Monthly Low	1.2994
Daily Fibonacci 38.2%	1.3275
Daily Fibonacci 61.8%	1.3239
Daily Pivot Point S1	1.3224
Daily Pivot Point S2	1.3125
Daily Pivot Point S3	1.307
Daily Pivot Point R1	1.3379
Daily Pivot Point R2	1.3433
Daily Pivot Point R3	1.3533

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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