“¢ Optimism over US-Mexico trade agreement now seems to have receded.
“¢ A modest pickup in the USD demand helps recover early lost ground.
“¢ Today’s key focus would be on the prelim US Q2 GDP growth figures.
The USD/CAD pair reversed an early dip to the 1.2900 neighborhood and is now looking to snap three consecutive days of losing streak.
Optimism over progress to revise the North American Free Trade Agreement (NAFTA), especially after the US-Mexico bilateral trade pact, kept benefitting the Canadian Dollar and dragged the pair to a fresh 2-1/2 month low on Tuesday.
However, easing US Dollar selling pressure, following the upbeat release of Conference Board’s consumer confidence index, extended some support and helped the pair to bounce off lows.
The greenback regained some positive traction on Wednesday and was seen as one of the key factors behind the pair’s modest intraday uptick of around 30-35 pips from the Asian session low level of 1.2903.
Meanwhile, a subdued action around crude oil prices did little to influence demand for the commodity-linked currency – Loonie, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum through the early European session.
It would now be interesting to see if the pair is able to build on the attempted recovery move as the focus now shifts to the release of prelim US Q2 GDP growth figures and Canadian current account data for some fresh impetus.
Technical levels to watch
Any subsequent up-move is likely to confront resistance near the 1.2960 level, above which the pair is likely to aim towards reclaiming the key 1.30 psychological mark. On the flip side, a sustained weakness back below the 1.2900 handle might now turn the pair vulnerable to extend the downfall towards testing the very important 200-day SMA support, currently near mid-1.2800s.
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