“¢ The post-FOMC USD upsurge remains uninterrupted and helps gain traction.
“¢ Bearish oil prices weigh on Loonie and remained supportive of the momentum.
“¢ Traders now eye US economic data for some short-term trading impetus.
The USD/CAD pair maintained its strong bid tone for the second consecutive session on Friday and jumped to the 1.3200 neighborhood, or two-month tops, in the last hour.
With an upbeat assessment of the economy, the Fed reiterated its commitment to continue raising interest rates gradually in the future and triggered a fresh leg of the US Dollar upsurge. The pair rebounded sharply sub-1.3100 level and continued gaining positive traction through the mid-European session on Friday.
The pair has now rallied nearly 150-pips from weekly lows, around mid-1.3000s, set on Wednesday, and the positive momentum was further fueled by the prevailing bearish sentiment surrounding oil markets. In fact, WTI crude oil to fresh seven-month lows, below the $60 handle, which was eventually seen denting demand for the commodity-linked currency – Loonie and driving the pair higher.
The Canadian Dollar was further weighed down by a report released on Thursday, citing a Canadian source with direct knowledge of the matter, that Canada is pushing back against the US attempts to change the text of their September trade pact.
Even from a technical perspective, the up-move now seems to have confirmed a near-term bullish breakout and hence, a follow-through up-move, led by some fresh technical buying, now looks a distinct possibility ahead of the US economic docket, highlighting the release of PPI figures and Prelim UoM Consumer Sentiment index for November.
Technical levels to watch
Momentum beyond the 1.3200 handle is likely to confront some supply near the 1.3225 region, above which the pair is likely to aim towards testing 1.3260 intermediate resistance en-route the 1.3300 handle.
On the flip side, the 1.3165-60 region now becomes an immediate support to defend, which if broken might prompt some aggressive long-unwinding trade and accelerate the slide back towards retesting the 1.3100 mark.