USD/CAD refreshes session tops, around 1.3535 region post-US/Canadian data

The USD/CAD pair dropped to fresh three-month lows, around the 1.3470-65 region in the last hour, albeit quickly recovered over 60-70 pips thereafter.

The US dollar struggled to preserve its early gains, instead witnessed some aggressive selling on the back of a strong rally in the shared currency post-ECB announcement. Some renewed USD weakness turned out to be one of the key factors that exerted some downward pressure on the USD/CAD pair.

However, a weaker tone around crude oil prices undermined the commodity-linked currency – the loonie – and helped limit the fall. The pair once again attracted some dip-buying near the very important 200-day SMA and was last seen trading near session tops, around the 1.3530 region.

Meanwhile, concerns about a further escalation in tensions between the USD and China extended some support to the greenback's safe-haven status. On the economic data front, the US Initial Weekly Jobless Claims came in higher-than-expected and did little to impress the USD bulls.

From Canada, the monthly trade balance data came in to show a deficit of C$ 3.25 billion for April as compared to C$ 2.36 billion expected and C$ 1.53 billion previous. The economic data failed to provide any meaningful impetus, albeit remained supportive of the bid tone surrounding the USD/CAD pair.

Given that the pair has been showing some resilience near a technically significant moving average, the set-up now supports prospects for some near-term short-covering move. Hence, a move towards the 1.3570-80 supply zone, en-route the 1.3600 mark, now looks a distinct possibility.

Technical levels to watch