• USD continues to strengthen on surging US bond yields.
• CAD further weighed down by dismal domestic data.
The USD/CAD pair caught some strong bids during the early NA session and touched to an intraday high level of 1.2629 in the past hour, albeit quickly retreated few pips thereafter.
The ongoing upsurge in the US Treasury bond yields, with 10-yr yields at the highest level since 2017 and the short-end at the highest since 2008, helped the US Dollar to continue gaining positive traction on Tuesday.
Meanwhile, the CAD was further weighed down by weaker-than-expected Canadian wholesale trade sales data for the month of December and provided an additional boost to the pair's bullish momentum.
Bulls, however, struggled to conquer the 100-day SMA barrier, currently near 1.2625-30 zone, and the pair quickly retreated around 20-25 pips from session tops. Hence, it would be prudent to wait for a follow-through buying interest, beyond the mentioned barrier, before positioning for any further near-term appreciating move.
Technical levels to watch
On a sustained move beyond 100-DMA hurdle, the pair is likely to surpass an intermediate resistance near mid-1.2600s and aim towards reclaiming the 1.2700 handle. On the flip side, retracement back below the 1.2600 handle might drag the pair back towards 50-day support near the 1.2555 region with some intermediate support near the 1.2575 level.
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