The USD/CAD pair extended recovery momentum from session low and touched daily peak at 1.3128 before retracing few pips to currently trade around 1.3115 region.
A mildly weaker opening for European equity markets is driving some safe-haven flows towards the US Dollar, helping the pair to rebound from the vicinity of 50-day SMA and snap four consecutive days of losing streak.
Further up-move, however, was restricted as upbeat sentiment surrounding oil prices, with WTI crude oil now approaching $51.00/barrel mark, is benefitting the commodity-linked currency – loonie. Crude oil gained traction after API, on Tuesday, reported an unexpected decline in US stockpiles during the week ended October 14.
Going forward, BOC monetary policy decision and subsequent press conference will take the centre stage on Wednesday, while short-term traders taking cues from the official EIA report on weekly crude inventories. From the US, traders will confront the release of building permits and housing starts data during early NA session.
Technical levels to watch
On a sustained move above session high resistance near 1.3130, the pair is likely to make a fresh attempt towards the very important 200-day SMA resistance near 1.3170-75 region, which if cleared seems to lift the pair beyond 1.3200 handle towards its next major resistance near 1.3050 area.
Meanwhile weakness below session low support near 1.3085 level is likely to get extended towards 50-day SMA near 1.3070 below which the pair is likely to aim towards 100-day SMA support near 1.3025 region.