USD/CAD reverses an early dip, back near mid-1.3200s

• Rallying US bond yields underpinned the USD and helped bounce off lows.
• A pullback in oil prices weighed on the Loonie and remained supportive.
• Traders now look forward to US retail sales for some short-term impetus.

The USD/CAD pair reversed an early dip back closer to weekly lows and is currently placed near the top end of its daily trading range, around mid-1.3200s.
 
The pair extended the previous session’s late pullback from the vicinity of the very important 200-day SMA and witnessed some follow-through weakness during the Asian session on Friday. However, a combination of factors that helped find some support just ahead of the weekly lows around the 1.3215 region.

Trade optimism, falling oil prices remain supportive

The overnight comments by the White House economic adviser Larry Kudlow, saying that there has been “very good progress,” and that a US-China trade agreement was close, revived hopes of an imminent US-China trade deal and provided a strong boost to investors’ appetite for perceived riskier assets.
 
The risk-on mood was evident from a goodish pickup in the US Treasury bond yields, which extended some support to the US Dollar. This coupled with a modest intraday pullback in crude oil prices further undermined the commodity-linked currency – Loonie and contributed to the pair’s rebound of around 30 pips.
 
It, however, remains to be seen if bulls are able to capitalize on the momentum or the pair continues to face stiff resistance near a technically significant moving average. Moving ahead, Friday’s release of the US retail sales data will now be looked upon for some meaningful impetus later during the early North-American session.

Technical levels to watch