The USD/CAD pair held on to its mildly positive tone near fresh one-year highs, albeit seemed lacking any strong follow-through buying interest, however price action remains supportive of positive momentum in US dollar’s favor. US Dollar Index is trading near one-year’s high in the 95.00 area, as the currency pair trades at 11-month’s high after breaking a wedge pattern on the daily chart which is a bullish setup. While the pair made great strides uptrend on back of strong momentum from spike in US treasury yields during North American and early Asian market hours, the gain was capped by modest retracement in the US Treasury bond yields resulting in pair failing to capitalize uptrend movement to breach 1.34 handle. Adding to this, near-term overbought conditions could also be one of the factors holding investors back from placing any fresh aggressive bullish bets and eventually led to a subdued/range-bound price action through the early European session.
USDCAD Hits Highs
The downside, however, remained cushioned amid a weaker tone surrounding crude oil prices, which tends to dampen demand for the commodity-linked currency – Loonie and hence, any meaningful slide would now be looked upon as a buying opportunity. CAD is on the back foot as crude oil is struggling to hold prices above $66.00 a barrel. In fact, investors are worried that the OPEC (Organization of Petroleum Exporting Countries) will ramp up production at its next meeting on June 22-23. Additionally, the mounting US-China trade war is as a negative for crude as the trading dispute has the potential to harm the global economy.
On the other hand, the US Dollar Index (DXY) which measures the greenback against a basket of currencies is trading near one-year’s high close to the 95.00 level. Investors are bullish on the buck which remains, for now, the strongest currency with the Federal Reserve being the most hawkish bank in the G10 currencies. Traders now look forward to the release of second-tier US economic data – Philly Fed manufacturing index and the usual initial weekly jobless claims data in order to grab some short-term opportunities later during the early North-American session. Expected support and resistance for the pair are at 1.3290 / 1.3265 and 1.3350 / 1.3370 respectively.
This article was originally posted on FX Empire
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