USD/CAD eases from tops, still well bid near mid-1.3400s

• USD/CAD staged a goodish intraday recovery move from three-month lows.
• Resurgent USD demand, sliding oil prices remained supportive of the uptick.
• Bulls struggled to find acceptance above 200-DMA, warranting some caution.

The USD/CAD pair quickly retreated around 40 pips from daily tops, albeit has still managed to hold with goodish intraday gains near mid-1.3400s.

A combination of factors assisted the pair to stage a solid rebound from three-month lows. Bulls, however, struggled to find acceptance above the very important 200-day SMA and the attempted recovery move stalled ahead of the key 1.3500 psychological mark.

The US dollar was back in demand amid a slight deterioration in the global risk sentiment. This coupled with some follow-through pullback in crude oil prices further undermined the commodity-linked currency – the loonie – and remained supportive of the uptick.

Meanwhile, the possibility of a dovish outlook from the Fed led to a fresh leg down in the US Treasury bond yields. This, in turn, prompted some USD selling at higher levels and was seen as one of the key factors capping gains for the USD/CAD pair.

It will be interesting to see if the pair is able to capitalize on the positive move or comes under some fresh selling pressure. In the absence of any relevant market moving economic releases, the pair remains at the mercy of the USD/oil price dynamics.

Technical levels to watch