“¢ Powell’s overnight hawkish comments continue to underpin the USD.
“¢ Weaker crude oil prices weigh on Loonie and provide an additional boost.
The USD/CAD pair built on overnight strong gains and jumped to 2-1/2 week tops during the early European session on Tuesday.
The US Dollar continued strengthening on the back of hawkish comments by the Fed Chair Jerome Powell and was seen as one of the key factors driving the pair higher for the second consecutive session.
Powell’s upbeat outlook for the US economy reaffirmed gradual Fed monetary policy tightening cycle through 2018 and remained supportive of the prevailing bullish sentiment around the greenback.
Meanwhile, a weaker tone around crude oil prices further weighed on the commodity-linked currency – Loonie and provided an additional boost to the pair’s ongoing positive momentum.
With today’s strong up-move, the pair has now added nearly 150-pips over the past 24-hours and the latest leg of a spike over the past hour or so could also be attributed to some technical buying above the 1.3215-20 support zone.
Hence, a follow-through up-move, supported by persistent USD buying interest, now looks a distinct possibility. Traders now look forward to the US housing market data for fresh impetus ahead of Powell’s second round of testimony before the House Financial Services Committee.
Technical levels to watch
Any subsequent up-move is likely to confront resistance near the 1.3265 level, above which the pair seems all set to aim towards reclaiming the 1.3300 handle. On the flip side, the 1.3200 handle now seems to protect the immediate downside, which if broken might prompt some long-unwinding trade and accelerate the slide back towards mid-1.3100s.
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