USD/CAD breaks higher to test 1.3100 ahead of US CPI, Canadian jobs

• USD index hits fresh 13-month highs, extends yesterday’s bullish momentum.
• Bulls head towards 1.3120 ahead of US CPI and Canadian employment data.

The USD/CAD pair broke the Asian consolidative range to the upside in early Europe, as the bulls look to retest the weekly tops of 1.3120 amid renewed US dollar strength across its main competitors.  

The greenback resumed its yesterday’s upbeat momentum, fuelled by hawkish comments from the FOMC member Evans, as he noted that the US economic fundamentals remain stronger while adding that the Fed is approaching the neutral rate. The USD index rallied sharply to fresh 13-month highs at 96.09, up +0.57% on the day.

Meanwhile, weaker oil prices amid escalating US-China trade tensions weigh negatively on the resource-linked Loonie, in turn collaborating to the upside in the spot. Looking ahead, the pair will remain exposed to further upside risks, as the US CPI is expected to tick higher in the month of July while the Canadian employment change data is likely to disappoint.

USD/CAD Technical Levels

According to FXStreet’s Analyst Eren Sengezer, “The pair could face the first technical resistance at 1.3070 (20-DMA) ahead of 1.3115 (Aug. 8 low) and 1.3145 (50-DMA). On the downside, supports are located at 1.3000 (100-DMA/psychological level), 1.2960 (Aug. 7 low) and 1.2920 (Jun. 8 low).”