“¢ The ongoing bullish move seems unaffected by subdued USD demand.
“¢ The ongoing fall in oil prices undermine Loonie and remain supportive.
“¢ All eyes remain glued to the outcome of today’s US mid-term elections.
The USD/CAD pair traded with a mild positive bias for the third consecutive session and extended the positive momentum further beyond the 1.3100 handle.
The pair built on Friday’s post-NFP up-move from over one-week lows and seemed rather unaffected by a subdued US Dollar demand. The USD bulls held on the defensive and preferred to wait on the sidelines ahead of the US midterm elections later today.
Meanwhile, the prevailing bearish sentiment around oil markets, with WTI crude oil struggling near seven-month lows undermined demand for the commodity-linked currency – Loonie and turned out to be one of the key factors driving the pair higher.
In absence of any major market-moving economic data, either from the US or Canada, the pair remains at the mercy of the outcome from Tuesday’s vote. A divided Congress will make it more difficult for the US President Donald Trump to pursue more aggressive policies and might eventually turn out to be a bearish catalyst for the greenback.
The key focus, however, will be on the latest FOMC monetary policy update, due to be announced on Thursday, which might play an important role in determining the pair’s next leg of directional move.
Technical levels to watch
Any subsequent up-move beyond the 1.3135 immediate hurdle is likely to confront some fresh supply near the 1.3165-70 region, above which the pair seems all set to aim towards reclaiming the 1.3200 handle.
On the flip side, the 1.3100 handle now seems to act as an immediate support and is followed by 100-day SMA near the 1.3075 region, which if broken is likely to accelerate the fall back towards mid-1.3000s.
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