“¢ Resurgent USD demand helps build on overnight sharp rebound.
“¢ Weaker oil prices weigh on Loonie and provide an additional boost.
“¢ Investors now brace for the release of latest FOMC meeting minutes.
The USD/CAD pair continued gaining positive traction through the mid-European session and jumped back above the 1.2900 handle.
The pair has witnessed a dramatic turnaround over the past 24-hours and rallied in excess of 150-pips from Tuesday’s over one-week low level of 1.2743. A combination of supportive factors, along with some technical buying on a sustained move back above 50-day SMA drove the pair sharply higher on Wednesday.
The recent US Dollar upsurge reignited on Wednesday and was largely unaffected by the ongoing slump in the US Treasury bond yields. This coupled with a modest pull-back in crude oil prices weighed on the commodity-linked currency – Loonie and further collaborated to the strong bid tone surrounding the major.
Currently trading around 1.2905-10 band, just a few pips off weekly tops touched in the last hour, as investors now gear up for the release of latest FOMC meeting minutes for some fresh impetus. Should the minutes reveal policymakers inclination to raise interest rates faster than the two-more hikes already priced in the market, the pair seems all set to break higher and move out of a broader trading range held over the past one-month or so.
Technical levels to watch
A follow-through buying has the potential to lift the pair towards the 1.2945-50 supply zone, above which the momentum could further get extended towards the key 1.3000 psychological mark. On the flip side, 1.2875-70 area now seems to protect the immediate downside, which if broken could accelerate the fall and drag the pair back towards 50-DMA support, currently near the 1.2830 region.
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