A follow-through USD retracement prompts some profit-taking on Friday. A goodish pickup in oil prices underpin Loonie and add to the selling pressure. OPEC meetings and Canadian macro data should help determine the next direction.
The USD/CAD pair snapped three consecutive days of a winning streak and held on to its weaker tone through the early European session.
The pair corrected from near one-year high set in the previous session and has now reversed a major part of gains recorded in the previous two trading sessions. Despite a goodish pickup in the US Treasury bond yields, the US Dollar retreated farther from 11-month tops and was seen as one of the key factors prompting some selling on the last trading day of the week.
This coupled with a strong up-move in oil prices, with WTI crude oil gaining over 1% and holding comfortably above the $66.00/barrel mark, underpinned demand for the commodity-linked currency - Loonie and was seen exerting some additional downward pressure on the major.
The downside, however, remained cushioned amid nervousness ahead of the crucial OPEC meetings on Friday and Saturday. Traders might also be reluctant to place aggressive bets and preferred to wait for the release of today's key Canadian macro data - the latest consumer inflation figures and monthly retail sales, before positioning for the next leg of directional move.
Technical levels to watch
A follow-through selling below the 1.3270 immediate support is likely to trigger some additional long-unwinding trade and continue dragging the pair further towards the 1.3200 round figure mark. On the flip side, the 1.3320-25 region now becomes immediate resistance to conquer, above which the pair is likely to resume with its appreciating move and aim towards reclaiming the 1.3400 handle.