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  • USD/CAD rallies past the 1.4100 mark and climbs to its highest level since January 2016.
  • Any meaningful pullback might still be seen as a buying opportunity and help limit losses.

The USD/CAD pair quickly retreated around 40-50 pips after hitting over four-year tops, albeit has still managed to hold its neck comfortably above the 1.4100 round-figure mark.

A sustained break through a near two-week-old ascending trend-channel resistance was seen as a key trigger for bullish traders and some strong follow-through positive momentum on Tuesday.

Against the backdrop of a strong pickup in the US dollar demand, an intraday turnaround in crude oil prices undermined the commodity-linked currency – the loonie and remained supportive.

However, oscillators on short-term charts are already flashing slightly overbought conditions, which might turn out to be the only factor capping further gains, rather prompt some profit-taking.

Given the pair’s strong upsurge of over 400 pips from the overnight swing lows, the set-up warrants some consolidation or a modest pullback before the next leg of an appreciating move.

Hence, any dips back closer to the mentioned trend-channel breakpoint, around the 1.4080 region, might still be seen as a buying opportunity and help limit deeper losses, at least for now.

USD/CAD 1-hourly chart

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Technical levels to watch