USD/CAD steadily climbs back above 1.3100 mark, fresh session tops
- USD/CAD regained traction on the first day of the week and reversed a part of Friday’s slide.
- Sliding oil prices undermined the loonie and remained supportive amid a modest USD uptick.
- Bulls might wait for a sustained breakthrough descending channel before placing fresh bets.
The USD/CAD pair edged higher through the early European session and refreshed daily tops, around the 1.3110 region in the last hour.
A combination of factors assisted the pair to catch some fresh bids on the first day of a new trading week and recover a major part of the previous session's negative move. The US dollar remained supported by Friday's jobs report, which showed that the unemployment rate in the US fell more than anticipated to 8.4% in August from 10.2% previous.
Apart from this, some follow-through retracement in crude oil prices – now down around 1.5% for the day – undermined the commodity-linked loonie and remained supportive of the bid tone surrounding the USD/CAD pair. However, the upside is likely to remain limited amid relatively thin liquidity conditions on the back of a holiday in the US and Canada.
Meanwhile, growing doubts about the sustainability of the US economic recovery might further hold the USD bulls from placing any aggressive bets. Investors might also be reluctant ahead of the Bank of Canada monetary policy decision on Wednesday, making it prudent to wait for some follow-through buying before positioning for further appreciating move.
Even from a technical perspective, the USD/CAD pair has been struggling to break through a resistance marked by the top boundary of over two-month-old descending channel, near the 1.3135 region, which if cleared decisively should pave the way for an extension of the recent recovery from sub-1.3000 levels, or multi-month lows set last week.
Technical levels to watch