- USD/CAD rallied around 120 pips from the early European session dip to sub-1.4400 levels.
- The strong intraday bounce seemed rather unaffected by some heavily USD selling pressure.
- A sustained move beyond 1.4500 needed for the resumption of the recent strong bullish run.
The USD/CAD pair has managed to recover a major part of its early lost ground, albeit struggled to extend the momentum further beyond the key 1.4500 psychological mark.
The pair managed to find decent support at lower levels and bounced around 120 pips from an intraday low level of 1.4375. The solid intraday bounce seemed rather unaffected by the heavily offered tone surrounding the US dollar.
The USD witnessed some aggressive long-unwinding trade on Tuesday in the wake of the Fed’s open-ended and unlimited quantitative easing, aimed at supporting credit markets and easing concerns about tightening liquidity.
Meanwhile, crude oil prices trimmed a part of the early strong gains, which tend to undermine demand for the commodity-linked currency – the loonie – and seemed to be the only factor behind the pair’s solid intraday bounce.
Apart from this, the uptick lacked any obvious catalyst and thus, warrants some caution before positioning for any further appreciating move. However, the emergence of some fresh buying indicates that the near-term bullish trend might still be far from being over.
Technical levels to watch