USD/CAD extends higher toward 1.32 as greenback gathers strength

• US Dollar Index gains traction in the NA session.
• 10-year US T-bond up more than 2% on the day.
• WTI stays in the red below $68.

The USD/CAD pair broke above its daily range in the last hour and touched a fresh daily high at 1.3178 on the back of a broad-based USD strength. As of writing, the pair is trading at 1.3175, adding 0.22% on the day.

Earlier today, the data from Canada showed that wholesale sales increased by 1.2% in May following April’s dismal 0.1% growth and surpassed the market expectation of 0.3%. However, despite that positive reading, the pair was able to preserve its bullish momentum with the greenback continuing to erase its losses from Friday.  

After closing the previous week near 94.50, the US Dollar Index spent the first half of the day moving sideways in a tight range in that area before gaining traction in the American trading hours. Although there was no clear catalyst behind that fresh USD buying wave, investors seem to be pricing the expectations of an upbeat GDP reading from the U.S. on Friday.

Fox Business reporter Charles Gasparino reported that there were rumors from White House regarding a possible 5% GDP increase in the second quarter, fueling the speculation that President Trump was leaking critical information on the growth figures before the actual data is released.

On the other hand, the barrel of West Texas Intermediate stars below the $69 mark on Monday, putting some extra weight on the commodity-sensitive loonie.

Technical outlook

With today’s rise, the RSI indicator on the daily chart turned north above the 50 mark, suggesting that the buyers regaining control of the price action. On the upside, resistances are located at 1.3200 (psychological level), 1.3285 (Jul. 19 high) and 1.3385 (Jun. 27 high).  The initial support for the pair aligns at 1.3120 (50-DMA), 1.3060 (Jul. 11 low) and 1.3000 (psychological level).