USD/CAD ticks higher to 1.3130 level amid a sudden fall in oil prices

   “¢   The USD built on its recent gains and continues lending some support.
   “¢   A sharp fall in oil prices undermined Loonie and remained supportive.
   “¢   Traders now eye US ISM services PMI for some short-term impetus.

The USD/CAD pair finally broke out of its daily consolidative range and refreshed session tops, around the 1.3130 region in the last hour, albeit lacked any strong follow-through.

Despite the overnight late pull-back, a combination of supporting factors helped the pair to regain positive traction for the second consecutive session on Tuesday and make a fresh attempt to build on its momentum back above the very important 200-day SMA.

The US Dollar build on its recent gains led by mostly upbeat US economic data last week and recovered its losses posted in reaction to a dovish FOMC message, which eventually turned out to be one of the key factors that helped the pair to defend the 1.3100 handle.

Meanwhile, the latest leg of a goodish pickup over the past hour or so could further be attributed to a sudden fall in crude oil prices (now down over 1% for the day), which tend to undermine demand for the commodity-linked currency – Loonie.  

Despite the uptick, bullish traders still seemed reluctant to place any aggressive bets, indicating that the near-term bearish pressure might still be far from over. Hence, it would be prudent to wait for a strong buying before positioning for any further near-term recovery move.

Today’s US economic docket, highlighting the release of ISM non-manufacturing PMI, will now be looked upon to grab some short-term trading opportunities, though the price action seems to suggest that any bullish reaction is more likely to be short-lived.

Technical levels to watch