USD/CAD taps 1.3300 mark but lacks follow through

Haresh Menghani FXStreet

• Persistent USD buying helps build on recent strong gains to fresh one-year tops.
• A goodish rebound in oil prices underpin Loonie and seemed to cap gains.

The USD/CAD pair finally broke out of its consolidative trading range and spiked to the 1.3300 handle, or fresh one-year tops in the past hour, albeit quickly retreated few pips thereafter.

A strong follow-through US Dollar buying interest, this time supported by a goodish pickup in the US Treasury bond yields, was seen as one of the key factors assisting the pair to build on its recent strong gains.

However, a strong rebound in crude oil prices, ahead of crucial meetings set for Friday and Saturday, underpinned demand for the commodity-currency - Loonie and kept a lid any further strong up-move.

Looking at the broader picture, the pair on Tuesday registered a bullish breakout and hence, a subsequent up-move, led by some fresh technical buying, remains a distinct possibility amid absent relatively thin economic docket.

Meanwhile, investors look forward to central bankers' speeches at the ECB Forum on Central Banking, in Portugal for some fresh impetus. Later during the New-York trading session, weekly US crude oil inventories data might also influence the price-action and help traders grab short-term opportunities.

The key focus, however, would be on Friday's very important Canadian macro data - the latest consumer inflation figures and monthly retail sales, which might help market participants determine the pair's next leg of directional move.

Technical levels to watch

A sustained move beyond the 1.3300 handle is likely to get extended towards 1.3335 supply zone before the pair eventually aims towards reclaiming the 1.3400 round figure mark. On the flip side, the 1.3270-65 region now seems to protect the immediate downside, which if broken might prompt some long-unwinding trade and drag the pair back towards the 1.3200 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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