“¢ Investors looked past the latest optimism over the US-Canada trade deal.
“¢ A goodish pickup in the USD demand helps ease the intense bearish pressure.
The USD/CAD pair built on overnight modest recovery move from over four-month lows and traded with a mild positive bias through the early European session on Tuesday.
The latest optimism led by a last-minute US-Canada deal to replace the replace the North American Free Trade Agreement (NAFTA) provided a strong boost to the Canadian Dollar on Monday and dragged the pair to sub-1.2800 level for the first time since May 22.
The pair, however, managed to find some support at lower levels and a goodish pickup in the US Dollar on Tuesday was further seen supporting the pair’s steady recovery of around 35-40 pips since the last US trading session.
Meanwhile, the up-move seemed lacking any strong conviction/follow-through and is likely to remain capped amid the ongoing strong bullish run in crude oil prices, which tend to underpin demand for the commodity-linked currency – Loonie.
Moving ahead, today’s relatively thin economic docket is unlikely to provide any meaningful impetus and hence, the Fed Chair Jerome Powell’s scheduled speech will be looked upon in order to grab some short-term trading opportunities.
Technical levels to watch
Any meaningful up-move is likely to confront fresh supply near the very important 200-day SMA, currently near the 1.2870-75 region, above which the pair is likely to aim towards reclaiming the 1.2900 handle.
On the flip side, weakness back below the 1.2800 mark, leading to a subsequent fall through overnight multi-month low is likely to accelerate the fall further towards 1.2740-30 support area en-route the 1.2700 handle.
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