“¢ Remains capped at weekly tops amid a modest USD retracement.
“¢ Surging US bond yields to limit USD downside and lend support.
“¢ Subdued oil price action does little to provide any fresh impetus.
The USD/CAD pair trimmed a part of its early gains, albeit has managed to hold with modest daily gains for the third consecutive session.
The pair struggled to build on its overnight goodish positive momentum further beyond the very important 200-day SMA and was now weighed down by a modest US Dollar retracement.
After yesterday’s strong upsurge, triggered by the upbeat ADP report and stellar ISM non-manufacturing PMI, the USD bulls took some breather and turned out to be the only factor exerting some downward pressure.
The USD downtick, however, seems more likely to remain cushioned by the ongoing upsurge in the US Treasury bond yields, which remained supported by the Fed Chair Jerome Powell’s comments that the Fed may raise interest rates past ‘Neutral’.
Meanwhile, a subdued action around crude oil prices did little to influence demand for the commodity-linked currency – Loonie, with the USD price dynamics turning out to be an exclusive driver of the pair’s momentum through the early European session on Thursday.
It would now be interesting to see if the pair is able to regain any positive traction or meets with some fresh supply amid absent relevant macroeconomic releases, either from the US or Canada.
Technical levels to watch
Immediate support is pegged near mid-1.2800s, below which the pair is likely to accelerate the fall back towards the 1.2800 handle en-route multi-month lows, around the 1.2785 region.
On the flip side, the 1.2885-90 region might continue to act as an immediate resistance, above which a bout of short-covering could lift the pair further towards 1.2915-20 supply zone en-route mid-1.2900s.
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