USD/CAD digesting yesterday’s strong move to 14-month tops
The USD/CAD pair seesawed between tepid gains / minor losses and remained confined within a narrow trading range below 14-month tops touched in the previous session.
The Canadian Dollar remained under intense selling pressure for the second straight session on Tuesday on concerns over the US President Donald Trump's plans to impose duties on soft lumber imports from Canada. The worries further escalated after Trump stated his intensions for a similar tax on the Canadian dairy industry.
• Canada’s PM Trudeau tells Trump that Canada will vigorously defend interests of softwood lumber industry
On top of it, the prevalent bearish sentiment around oil market further collaborated to the pair's up-surge beyond the 1.3600 handle. Meanwhile, a late recovery in WTI crude oil prices prompted some profit-taking, with the pair fading around 60-pips from the highest level since Feb. 2016.
A follow through retracement on Wednesday could be attributed to a subdued US Dollar price-action as market participants eagerly wait for Trump's big announcement on tax reforms. However, softer oil prices did little to extend any further support, with the pair reversing minor losses to currently trade nearly unchanged around 1.3570 region.
Later during NA session, Canadian monthly retail sales data would now be looked upon for some fresh impetus and immediate respite for the Canadian Dollar. From the US economic docket, the weekly crude oil inventories data by EIA would also be in focus and should influence the commodity-linked currency – Loonie.
Technical levels to watch
A follow through retracement below mid-1.3500s is now likely to find immediate support near 1.3525-20 area and is closely followed by an important psychological mark support at the 1.35 handle. On the flip side, momentum back above the 1.3600 handle now seems to lift the pair beyond 1.3625 area (yesterday's high) towards testing 1.3640-45 resistance en-route its next major hurdle near 1.3670-80 region.