“¢ CAD weighed down by worsening US-Canada relations/NAFTA concerns.
“¢ Weaker oil prices/a modest USD uptick provide an additional boost.
The USD/CAD pair reversed an early dip to 1.2955 and is now looking to build on its momentum back above the key 1.30 psychological mark.
The Canadian Dollar was weighed down by worsening US-Canada trade ties, especially after a war of words between the US President Donald Trump and Canadian Prime Minister Justin Trudeau at the crucial G-7 meeting.
Investors also seemed nervous over the effect of recent confrontation on NAFTA deal, which coupled with a weaker tone around crude oil prices exerted some additional downward pressure on the commodity-linked currency – Loonie.
Meanwhile, the focus now seems to have firmly shifted away from a BoC rate hike in July, with a modest US Dollar uptick, supported by a goodish pickup in the US Treasury bond yields, further collaborating to the pair’s intraday up-move of over 50-pips.
It, however, remains to be seen if the pair is able to build on its strength or continues facing difficulty in moving back above the 1.3040-50 heavy supply zone amid empty economic docket on Monday.
However, this week’s important releases/events, including the latest FOMC monetary policy update, would play a key role in determining the pair’s next leg of directional move.
Technical levels to watch
Immediate hurdle remains near the 1.3040-50 region, above which the pair could make an attempt towards reclaiming the 1.3100 handle with some intermediate resistance near the 1.3075-80 area.
On the flip side, the 1.2960-50 zone might continue to protect the immediate downside, which if broken might turn the pair vulnerable to break back below the 1.2900 handle and head towards testing 50-day SMA support near the 1.2865 region.
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