The pair built on previous session's strong upsurge and climbed above 1.3000 mark during the early European session, albeit retreated few pips thereafter. What is next? Gain insight into today's USDCAD technical analysis.
18 October, GKFX – A combination of supporting factors assisted the pair to catch some aggressive bids on Wednesday and rebound sharply from over one-week lows set on Tuesday, recovering all of its losses recorded over the past two trading session.
A sharp fall in crude oil prices, following the release of bearish EIA weekly US crude oil inventories data, weighed heavily on the commodity-linked currency - Loonie. According to the report, crude oil stocks in the US increased by 6.5 million barrels in the week ending October 12.
Adding to this, resurgent US Dollar demand, further supported by a hawkish assessment of the latest FOMC meeting minutes, turned out to be key factors behind the pair's strong intraday rally of over 90-pips.
Minutes of the Federal Reserve’s September meeting revealed that majority of the Committee members believed that rates will have to rise until the economy slows down on the back of rising borrowing costs and reinforced market expectations that the Fed will continue on its path of gradual rate hikes beyond 2018.
The pair jumped back above the key 1.3000 psychological mark and continued gaining positive traction for the second consecutive session, albeit once again stalled the positive momentum just ahead of the 100-day SMA barrier amid a modest USD retracement slide.
Despite a fresh leg of an upsurge in the US Treasury bond yields, the greenback failed to capitalize on the early up-move and has now drifted into negative territory, which turned out to be the only factor keeping a lid on any further up-move for the major, at least for the time being.
USDCAD Technical Forecast
The 1.30 handle now seems to protect the immediate downside, which if broken might accelerate the fall back towards the 1.2960-55 support area. On the upside, the 100-day SMA, currently near the 1.3065 region remains an important barrier to clear, above which the pair seems all set to aim towards reclaiming the 1.3100 handle.
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