USD/CAD holds steady near session tops, eyeing a move beyond 1.3400 mark

• A goodish USD rebound from two-year lows assisted USD/CAD to gain some traction.
• Weaker crude oil prices undermined the loonie and remained supportive of the bounce.
• Dovish Fed expectations might keep a lid on any runaway rally for the pair, at least for now.

The USD/CAD pair held on to its modest recovery gains through the early European session and was last seen hovering near daily tops, just below the 1.3400 mark.

Hopes of some sort of an agreement over the next round of the US fiscal measured led to a goodish US dollar rebound from two-year lows. This, in turn, assisted the pair to reverse an early dip to the 1.3330 area – the lowest level since June 10.

The greenback was further supported by a strong pickup in the US Treasury bond yields. This coupled with a softer tone surrounding oil prices undermined the commodity-linked currency – the loonie – and remained supportive of the USD/CAD pair’s uptick.

However, dovish Fed expectations might hold investors from placing any aggressive USD bullish bets and cap gains for the major. Worries that the continuous surge in coronavirus cases could undermine the economic recovery has been fueling speculations of more stimulus from the Fed.

Hence, it will be prudent to wait for some strong follow-through buying before confirming that the USD/CAD pair has formed a strong base ahead of the 1.3300 mark and positioning for any further appreciating move.

Market participants now look forward to the US economic docket – highlighting the release of the Conference Board’s Consumer Confidence Index and Richmond Manufacturing Index. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch