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  • USD/CAD’s downside appears cushioned amid firmer US dollar.
  • But the bulls lack follow though amid a rally in WTI prices.
  • All eyes on the Canadian data and US NFP release for fresh directives.

USD/CAD is trying hard to hold the ground above 1.2650 in European trading, facing headwinds from the relentless rise in oil prices.

However, the US Treasury yields rally induced strength in the US dollar keeps the buying interest afloat around the spot, as it attempts a renewed uptick towards the 1.2700 level.

The Treasury yields extend its recent rally above the 1.50% level, thanks to the sell-off in the US bonds after Fed Chair Jerome Powell downplayed concerns over the bond market rout while speaking in an interview with the Wall Street Journal (WSJ) on Thursday.

Meanwhile, the bears fight for control as the US oil refreshes 14-month tops just shy of the $65-mark, which lends support to the resource-lined Loonie. The WTI barrel rallies hard on supply restraint by  OPEC and its allies (OPEC+). The alliance agreed not to hike the oil output in April, thereby, rolling over the output cuts.

Attention now turns towards the all-important US NFP data for the next direction in the major. Note that the US private-sector jobs data published by the ADP last Wednesday failed to impress the markets. Also, US stimulus news and Canadian second-tier data will remain in focus, as investors continue to watch the oil price action.

USD/CAD: Technical outlook

“Repeated failures near the 1.2700 mark warrants some caution before positioning for any meaningful positive move. Hence, traders are likely to wait for a convincing breakthrough the 100 pips trading range to confirm the pair’s near-term trajectory. On the flip side, a short-term ascending trend-line, currently around the 1.2600 mark should protect the immediate downside.    FXStreet’s Haresh Menghani notes.

USD/CAD: Additional levels