USD/CAD retakes 200-DMA at 1.3100 handle

The USD/CAD pair caught some bids near mid-1.3000s and recovered back above 1.3100 handle, snapping three consecutive days of steep declines.

Currently trading around 1.3110 region, testing session peaks, rising US treasury bond yields seems to have triggered a bout of US Dollar short-covering move across the board and has been a key factor helping the pair to recover back above the very important 200-day SMA. 

Meanwhile, a retracement in oil prices, with WTI crude oil drifting back below $53.00/barrel mark, is further denting demand for the commodity-linked currency - Loonie, and collaborating to the pair's recovery from weekly lows. 

Of late, the greenback has failed to benefit from the US President Donald Trump's actions, pointing to his plans to increase public spending, as investors remained concerned over his protectionist stance and warning over stronger domestic currency, which might continue to weigh on the greenback and could possibly restrict any swift recovery for the major.

Today’s US economic docket, featuring the release of weekly unemployment claims, goods trade balance, flash services PMI, new home sales and CB’s leading indicator, would be looked upon for some short-term trading opportunities during early NA session. 

Technical levels to watch

A follow through buying interest above 1.3120 level is likely to lift the pair towards 1.3150-55 horizontal resistance above which a fresh bout of short-covering should continue to boost it beyond 1.3200 handle towards 1.3220 resistance.

On the flip side, renewed weakness below 1.3065 support now seems to drag the pair back towards 1.3030 region, en-route 1.30 important psychological mark support.