A stronger dollar and negative risk sentiment has been underpinning the pair recently but it wasn't really until yesterday, that we really saw an upside move with decent momentum. And that comes despite oil prices staying more resilient with WTI crude rising to fresh three-week highs and moving above $74 in trading yesterday.
But for USD/CAD, it is certainly shaping up to be more of a technical breakout as the pair shakes off the back and forth action in and around the 100 (red line) and 200-day (blue line) moving averages for about a week now.
The jump higher yesterday even took out key trendline resistance from the March and April highs and that is seeing the pair contest the 1.3600 mark at the moment. But if the technical development holds, buyers are looking poised to retest the April highs at 1.3651-67 potentially next.
Even though more resilient oil prices is a tailwind for the loonie, dollar and risk sentiment are still two key drivers of trading conditions at the moment. And given the technical break yesterday, it continues to suggest that the latter two will remain as the two more important factors driving price action at the moment.