USD/CAD flirting with tops near 1.2670

The greenback is picking up some pace vs. its Canadian neighbour today, with USD/CAD hovering over the 1.2670 region after testing lows around 1.2640 in early trade.

USD/CAD supported near 1.2640

After bottoming out in levels last seen over a year ago near 1.2640 following Friday’s poor results from the US docket, the pair is attempting to regain some traction and it has managed to approach so far daily highs in the 1.2665/70 band.

The unexpected and renewed hawkish tone from the Bank of Canada as of late has been mostly responsible for the pair’s decline of more than 8% since 2017 tops near 1.3800 the figure seen in early May to Friday’s low at 1.2640. It is worth mentioning the that BoC rose the repo rate by 25 bp at its meeting last week to 0.75%, matching the broad consensus.

The recent heightened role of the BoC has relegated crude oil dynamics as a secondary driver for the pair’s price action, which is now seeing the barrel of West Texas Intermediate toying with tops in the vicinity of $46.70.

On the data front, Canadian foreign security transactions are only due, whereas the NY Empire State index is expected south of the border.

USD/CAD significant levels

As of writing the pair is gaining 0.13% at 1.2666 and a break above 1.2750 (high Jul.14) would aim for 1.2833 (10-day sma) and then 1.2913 (23.6% Fibo of 1.3795-1.2640). On the downside, the next support emerges at 1.2640 (2016 low Jul.14) seconded by 1.2458 (2016 low May 3) and then 1.2124 (monthly low Jun.18 2015).