“¢ Subdued USD demand/oil price-action failed to provide any fresh impetus.
“¢ Investors also seemed reluctant to place aggressive bets ahead of the BoC.
The USD/CAD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading range, just below two-month tops set in the previous session.
On Tuesday, the pair built on last week’s strong gains and extended its bullish momentum further beyond the key 1.30 psychological mark. A combination of supporting factors, ranging from a strong US Dollar upsurge and a softer tone around crude oil prices, pushed the pair to an intraday high level of 1.3047, marking its highest level since March 21.
The up-move, however, lacked any strong follow-through and was being capped by a modest USD retracement, despite a goodish pickup in the US Treasury bond yields. Meanwhile, a consolidative price move in oil markets also did little to influence demand for the commodity-linked currency – Loonie and further collaborated to the subdued action on Wednesday.
Moreover, investors also seemed reluctant to place any aggressive bets and preferred to wait for the BoC‘s latest monetary policy update, due later in the day. Heading into the key event risk, the US economic docket, featuring the release of ADP report on private sector employment and the second estimate of Q1 GDP growth figures might assist traders to grab some short-term opportunities.
Technical levels to watch
A retracement back below the 1.30 handle could get extended towards 1.2960 horizontal support, which if broken might turn the pair vulnerable to slide further towards testing sub-1.2900 level. On the upside, mid-1.3000s now seems to have emerged as an immediate hurdle, above which the pair is likely to aim towards reclaiming the 1.3100 handle.
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