The USD/CAD pair picked up from where it left off yesterday and rallied past the 1.2500. The current setup favors bullish traders as the pair looks set to appreciate further over the coming hours.
US Dollar Recovers After Early Dip
The USD/CAD pair started the day in an excellent fashion, picking up from its wins of yesterday. The pair began trading at 1.2332 and quickly rallied close to 1.2500. However, the momentum was lost briefly during the European trading session, dropping towards the 1.2425 region.
The bearish trend didnt last as the USD/CAD pair soon resumed its rally, rising by over 1.3% to reach an intraday high of 1.2519. However, it has consolidated and is currently trading around 1.2505.
A softer tone around crude oil prices undermined the commodity-linked Loonie. The effect began to show, and the US Dollar soon regained control and turned the market bullish. Investors are now turning their attention to Wednesdays release of the FOMC meeting minutes and placing aggressive bets on the event.
USD/CAD Could Soar Higher
The USD/CAD pair could extend its momentum, allowing bullish traders to push it further towards the reclaiming the 1.2600 region. If the rally is sustained, the bulls would be targeting the next resistance zone around 1.2640-50.
However, failure to sustain the current rally could see the market drop toward the 1.2400 mark. The decline could lead to a fresh buying opportunity for the traders. An extended bearish sentiment could bring the 100-day SMA (around the 1.2380 region) into sharp focus. This region could serve as a pivotal point for short-term traders.
If the market should drop and stay below the 100-day SMA, it could eliminate the positive outlook for the pair and lead to some technical selling. However, with the US Dollar performing excellently in recent days, the bulls might not allow the pair to drop below that critical support level.
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