USD/CAD jumps to weekly tops, around 1.3075 region amid notable USD demand
- USD/CAD gains strong positive traction for the second consecutive session on Wednesday.
- A goodish pickup in the USD demand turned out to be a key factor driving the pair higher.
- Bullish oil prices might underpin the loonie and cap gains amid holiday-thinned liquidity.
The intraday USD buying picked pace during the mid-European session and pushed the USD/CAD pair to fresh weekly tops, around the 1.3075 region in the last hour.
A goodish pickup in the US dollar demand assisted the pair to gain traction for the second consecutive session on Wednesday and recover further from 10-month lows touched at the beginning of this week. The USD uptick lacked any obvious fundamental catalyst and could be solely attributed to the emergence of some selling around the European currencies – euro and pound.
Nevertheless, the USD bulls, at least for now, seemed to have shrugged off growing market worries about the potential economic fallout from the continuous surge in new COVID-19 cases. That said, the imposition of stricter restriction in several US states has revived hopes for a substantial US fiscal stimulus measures, which might cap any runaway rally for the buck.
Meanwhile, the latest optimism over a potential vaccine for the highly contagious coronavirus disease lifted expectations for a swift recovery in the fuel demand. This was evident from a strong bullish run in oil prices, which jumped to more than two-month tops. This, in turn, might underpin the loonie and keep a lid on any further gains for the USD/CAD pair.
Moreover, a bank holiday in both the US and Canada might further hold investors from placing any aggressive bets or positioning for any big movements in either direction. This makes it prudent to wait for some strong follow-through selling, possibly beyond the 1.3100 mark, before confirming that the USD/CAD pair has bottomed out in the near-term.
Technical levels to watch