USD/CAD struggles to gain traction further beyond 1.23 handle

Haresh Menghani FXStreet

The USD/CAD pair held with minor gains and was now looking to extend overnight strong gains, above the 1.2300 handle.

On Monday, the pair built on Friday's modest recovery move from the 1.2100 handle and gained some positive traction after the Bank of Canada Deputy Gov. Timothy Lane said that the rise in protectionist sentiment could hurt the Canadian economy.

The pair touched an intraday high level of 1.2338 but additional gains were capped by the prevalent bullish sentiment around crude oil prices, which tends to benefit the commodity-linked currency - Loonie.

Meanwhile, a fresh wave of US Dollar selling bias on Tuesday was further seen keeping a lid on any further up-move for the major, at least for the time being.

Later during the NA session, the Canadian manufacturing sales data, along with the US data dump, would now be looked upon for some fresh impetus ahead of the next big event risk - FOMC monetary policy decision, due to be announced on Wednesday.

• Fade rallies in USD/CAD – Scotiabank

Technical levels to watch

A follow through buying interest beyond 1.2340 level is likely to pave way for extension of the pair's near-term recovery trend towards the 1.2400 handle en-route 1.2425 resistance area.

On the flip side, any retracement from higher levels now seems to find fresh buying interest near 1.2250-45 area, below which the pair could drift back below the 1.2200 handle towards testing its next support near the 1.2175-70 region.

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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