“¢ Weaker oil prices weigh on Loonie and assist gain strong positive traction.
“¢ Technical buying above 1.3100 handle further accelerate the momentum.
“¢ Subdued USD price action does little to hinder the up-move ahead of US GDP.
The USD/CAD pair caught some aggressive bids on Friday and climbed to six-week tops, around the 1.3140 region during the early European session.
The pair extended the post-BoC rebound from one-week lows, near the 1.2970 region, and built on the positive momentum further beyond the 1.3100 handle, reversing all of its weekly losses. A weaker tone around crude oil prices seemed to be the only factor weighing heavily on the commodity-linked currency – Loonie and driving the pair higher.
Apart from the weakening oil prices, the strong intraday up-move lacked any obvious fundamental triggered and seemed rather unaffected by a subdued price action around the US Dollar, which was consolidating overnight strong gains to over two-month tops.
Adding to this, possibilities of some trading stops being triggered on a sustained move beyond the 1.3100 handle could also be seen as one of the factors behind the pair’s latest leg of a sudden pickup over the past hour or so.
Hence, it would be prudent to wait for a strong follow-through buying before confirming that the up-move is led by a fresh bullish breakout or is only a stop run. Traders now start repositioning for today’s important US macro data – the advance Q3 GDP growth figures, due for release later during the early North-American session.
Technical levels to watch
Immediate resistance is now pegged near the 1.3160 level, above which the pair seems all set to surpass the 1.3200 handle and test 1.3225 supply zone. On the flip side, the 1.3100 handle now becomes an immediate support to defend and is followed by 100-day SMA support near the 1.3075-70 region.
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