USD/CAD flirts with near two-week high around 1.2570, seems poised to climb further
- USD/CAD gained positive traction for the third straight day and shot to a near two-week high.
- Oil prices languished near the multi-week low and undermined the commodity-linked loonie.
- The Fed’s hawkish outlook continued acting as a tailwind for the USD and remained supportive.
The USD/CAD pair maintained its bid tone during the early North American session and was seen hovering near the top end of its daily trading range, around the 1.2570 region.
The pair build on the previous day's breakout momentum through the 1.2500 psychological mark and gained traction for the third successive day on Thursday. With the latest leg up, the USD/CAD pair has now recovered over 150 pips from the YTD low, around the 1.2400 mark touched on Tuesday. Crude oil prices languished near the three-week low touched on Wednesday, which, in turn, undermined the commodity-linked loonie and acted as a tailwind for the major.
On the other hand, a softer tone around the US Treasury bond yields capped the recent US dollar rally to a near two-year high and did little to provide any additional lift to the USD/CAD pair. That said, the Fed's hawkish outlook favours the USD bulls and supports prospects for a further near-term appreciating move for the major. Hence, a subsequent move towards testing last week's swing high, around the 1.2590-1.2595 region, remains a distinct possibility.
On the economic data front, the US Weekly Initial Jobless Claims dropped to over a five-decade low level of 166K in mid-April. Adding to this, the previous week's reading was also revised down to 171K, pointing to strong higher and the lowest layoffs on record. This adds credence to the near-term constructive outlook and pushed the USD/CAD pair to a near two-week high. Meanwhile, any meaningful pullback should now be seen as a buying opportunity and remain limited.
Technical levels to watch