USD/CAD on the bids near multi-week top amid broad greenback strength

• The greenback continues to rally as traders cheer the Fed’s not-so-dovish cut.
• Manufacturing activity data from China and Canada will be followed for fresh impulse.

With crude prices declining further below 200-day EMA and the USD holds its head high, the USD/CAD pair rises to the fresh 6-week top to 1.3212 amid early Asian session on Thursday.

The Fed-led upside of the US Dollar (USD) continues after the traders seek solace in the greenback amid on-going geopolitical tension between the US-North Korea and the US-Iran. Adding to the pair’s upside could be the price weakness of Canada’s largest export item, crude oil, despite the upbeat inventory report. Further to follow is the US and China’s failure to offer any positive trade signal at the end of a two-day talk in Shanghai.

It should also be noted that traders showed little attention to the US President Donald Trump’s criticism of the Federal Reserve’s monetary policy although the central bank recently announced a 0.25% rate cut.

Looking forward, China’s July month Caixin Manufacturing Purchasing Managers’ Index (PMI) data will be followed by Canada’s Markit Manufacturing PMI for the same month to direct near-term pair moves. While China’s manufacturing gauge is expected to rise to 49.6 from 49.4, the Canadian index is also likely increasing from 49.2 to 49.5. However, it’s worth noting that both the indices bear the consensus to remain in the contraction region.

Technical Analysis

50-day simple moving average (SMA) level of 1.3223 becomes the key near-term resistance that buyers will target before looking at the June month low around 1.3242 and 100-day SMA near 1.3310. Alternatively, 1.3145 can please sellers during the pullback ahead of challenging the sentiment with 1.3108 support comprising 21-day SMA.