USD/CAD consolidates overnight strong gains, above mid-1.2700s
• CAD weakens as oil prices falter.
• US/Canadian data to provide some impetus.
• Focus remains on central bankers speeches.
After yesterday's sharp up-move, the USD/CAD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading range just above mid-1.2600s.
A combination of supporting factors prompted some short-covering move during the NY trading session on Monday, with the pair surging around 90-pips from session low level of 1.2680. The US Dollar recovered sharply on the back of stronger-than-expected new home sales data, while lower oil prices weighed on the commodity-linked Loonie.
The up-move, however, lacked any strong follow-through momentum amid a subdued USD price action. Meanwhile, the prevalent negative trading sentiment around oil markets, with WTI crude oil holding weaker below $58.00 handle now seems to be contributing towards limiting any immediate downside.
On the economic data front, the US CB consumer confidence index and Canadian Raw Materials Price Index (RMPI) might provide some short-term trading impetus. The key focus, however, would be on the Fed Chair Designate Jerome Powell's testimony before the Senate Committee and BOC Governor Stephen Poloz's speech about the Financial System Review, which might trigger some volatility later during the day.
Technical levels to watch
Momentum above 1.2775 level now seems to get extended even beyond the 1.2800 handle back towards 1.2830-35 supply zone. On the flip side, mid-1.2700s now seems to protect the immediate downside, below which the pair could drift back towards the 1.2700 handle.