USD/CAD recovers early lost ground to 1-1/2 week lows, back near 1.29 mark

Haresh Menghani FXStreet

• A goodish USD rebound helps rebound around 70-pips from intraday lows.
• Weaker oil prices further weigh on commodity-linked Loonie.

The USD/CAD pair managed to recover its early losses to 1-1/2 week lows and has now jumped to fresh session tops, back above the 1.2900 handle.

The post-FOMC US Dollar selling pressure now seems to have abated and was seen as one of the key factors behind the pair's rebound of around 70-pips from an intraday low level 1.2830.

This coupled with a follow-through weakness in crude oil prices dented demand for the commodity-linked currency - Loonie and further collaborated to the recovery move through the early NA session.

Meanwhile, the market seems to have largely negated an unexpected rise in the US initial weekly jobless claims and the ongoing slump in the US Treasury bond yields, with a goodish USD rebound acting as an exclusive driver of the pair's bullish move through the 1.2900 handle.

It would now be interesting to see if the pair is able to build on the momentum as traders now look forward to Friday's important Canadian macro releases - the latest consumer inflation figures and monthly retail sales, which along with the US durable goods orders should provide some fresh directional impetus.

Technical levels to watch

A follow-through buying interest has the potential to continue lifting the pair further towards the 1.2950-60 supply zone, above which the pair is likely to make a fresh attempt towards reclaiming the key 1.30 psychological mark.

On the flip side, weakness back below 1.2875-70 area might now turn the pair vulnerable to break below the 1.2830 intermediate support and head towards challenging the 1.2800 handle.

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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