• Fails to capitalize on early up-move, despite resurgent USD demand.
• Bullish oil prices/positive NAFTA comments underpin Loonie.
• Friday’s US/Canadian employment details to provide a fresh directional impetus.
The USD/CAD pair faded a bullish spike to the 1.2800 handle and quickly retreated around 30-35 pips from session tops.
The pair built on its steady recovery move from over 1-month lows and jumped to fresh session tops during the early NA session on the back of a larger than expected rise in Canadian trade deficit. The pair, however, failed to capitalize on the up-move and failed to gain any follow-through traction, despite a strong US Dollar buying interest.
A sharp spike in oil prices, with WTI crude oil nearing $64.00/barrel mark, underpinned the commodity-linked currency - Loonie and kept a lid on the up-move. This coupled with positive comments by the Canadian PM Justin Trudeau, saying that NAFTA talks are moving forward significantly, provided an additional boost to the Canadian Dollar and collaborated to the pair's latest leg of fall over the past hour or so.
The retracement slide now seems to have stalled, at least for the time being, as traders now seemed reluctant to place aggressive bets ahead of Friday's employment details from the US (NFP) & Canada, which might provide some fresh directional impetus.
Technical levels to watch
On a sustained move beyond the 1.2800 handle, the pair is likely to aim towards testing 1.2835-40 horizontal resistance before eventually darting towards the next major hurdle near the 1.2885-90 region.
On the flip side, weakness back below 1.2765 level is likely to accelerate the fall towards 50-day SMA support near the 1.2725 en-route the 1.2700 handle, nearing 100-day SMA.
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