- A modest pickup in the USD demand pushed USD/CAD to fresh session tops in the last hour.
- The emergence of some dip-buying near the 1.2130 area supports prospects for further gains.
- A sustained break below the 1.2100 mark would negate the near-term constructive outlook.
The USD/CAD pair rallied over 40 pips from the early European session lows and climbed to fresh daily tops, around the 1.2170 region in the last hour.
Expectations of a slightly less dovish Fed largely offset a fresh leg down in the US Treasury bond yields and acted as a tailwind for the US dollar. This, in turn, was seen as a key factor behind the latest leg of a sudden pick up in the last hour or so. The uptick seemed rather unaffected by bullish crude oil prices, which tends to underpin the commodity-linked loonie.
From a technical perspective, the USD/CAD pair attracted some dip-buying near a previous strong horizontal resistance breakpoint, now turned support near the 1.2130 region. This should now act as a key pivotal point for short-term traders and help determine the next leg of a directional move. The pair was last seen hovering just below one-month tops touched last Friday.
Meanwhile, technical indicators on the daily chart have just started moving into the positive territory and support prospects for additional gains. Some follow-through strength beyond the 1.2180 region (monthly lows) will reaffirm the constructive outlook and push the USD/CAD pair towards the 1.2200 mark en-route the next relevant hurdle near the 1.2265-70 region.
On the flip side, the 1.2130 region might continue to protect the immediate downside. This is followed by support near the 1.2100 mark, which if broken decisively will negate any near-term positive bias. The USD/CAD pair might then turn vulnerable and accelerate the slide back towards the key 1.2000 psychological mark, or the lowest level since May 2015 touched earlier this month.
USD/CAD 4-hour chart
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