USD/CAD Knocks 1.3100 Handle, Now Eyeing to Test 1.3150
Building on to its recovery momentum above 1.3000 psychological mark, the USD/CAD pair tapped 1.3100 handle on Thursday for the first time since April 8.
The recent recovery in the greenback got an additional boost on Wednesday, when the minutes from FOMC's meeting in April suggested that prospects of a June interest rate-hike are still not off the table.
Ahead of the release, the USD/CAD pair was comfortably trading above 50-day SMA but was acing difficulty in conquering 1.3000 psychological mark. However, hawkish tone from the Fed minutes assisted the pair to extend its momentum beyond 1.3000 handle.
Moreover, weakness in crude oil, which has now fallen to the vicinity of $47.00 mark, also seems to contribute towards slide in the Canadian Dollar's against its US counterpart. Crude dropped on Wednesday after an unexpected increase in US crude inventories and remained defensive on Thursday led by a stronger US Dollar.
From technical perspective, the USD/CAD pair seems more likely to extend its near-term recovery trend on a sustained strength above 1.3100 handle. However, RSI reading above 70, on H1 and H4, points to a minor consolidation phase before the pair resumes its upward trajectory.
Technical levels to watch
On a sustained break through 1.3100 handle, the pair seems to immediately dart towards April daily closing highs resistance near 1.3145-50 area. The momentum might provide a bullish spike to 1.3185-90 zone, where bulls are likely to take some breather.
On the flip side, 1.3025-20 now become immediate support to defend, below which the pair could head back to retest 50-day SMA resistance break, now turned support, near 1.2930-25 area.