USD/CAD retreats from multi-month tops as oil prices recover

Having failed to move beyond the 1.3800 handle, the USD/CAD pair trimmed majority of its early gains to fresh 14-month tops and has now retreated back closer to mid-1.3700s.

A modest recovery in oil prices, with WTI crude oil rebounding sharply from sub-$44.00 level (six-month lows) and currently placed near $45.50-60 region, provided a much needed respite for the commodity-linked currency - Loonie, and halted the pair's strong up-surge to the highest level since Feb. 2016.

In spite of the pull-back, the pair has managed to maintain its positive bias for the 11th consecutive session amid some renewed greenback buying interest. In fact, the key US Dollar Index has now jumped to session tops near 98.75 region, ignoring subdued action surrounding the US treasury bond yields, and collaborated towards limiting further downslide, at least for the time being.

Today key focus would remain on the keenly watched monthly jobs report (NFP) from the US, which would drive investors’ expectations over June Fed rate-hike move and eventually provide fresh impetus for the pair's next leg of directional move.

   •  US nonfarm payroll employment to pick up to a 165k pace in April - TDS

Technical levels to watch

A follow through retracement below 1.3750-45 immediate support is likely to get extended towards 1.3710 support before the pair eventually breaks below the 1.3700 handle and head towards testing its next support near mid-1.3600s.

On the upside, the 1.3800 handle remains immediate hurdle, which if conquered would set the stage for continuation of the pair's upward trajectory further towards 1.3840-45 intermediate resistance ahead of 1.3890-1.3900 barrier.