The BOC's softer stance saw the loonie fall in overnight trading

USD/CAD D1 07-03

And that allowed USD/CAD to rise above the 1.3400 handle and take a run at the 6 December high at 1.3445. That remains the key resistance level that is keeping gains in-check for the time being. The BOC decided to drop its explicit hiking bias in its statement yesterday, and that precipitated further weakness in the loonie.

As it stands, buyers are well in control of the pair now as it moves away from the key resistance region previously around the 76.4 retracement level @ 1.3384. But for the time being, upside potential is capped by the 1.3445 level as well as resistance around 1.3490-00.

So, what's next for USD/CAD?

I reckon today may see a bit of a quieter trading period for the pair around the resistance levels mentioned as we gear towards the US and Canadian jobs report tomorrow. Ultimately, the reports there will be what sets the tone on any further extension or retracement in the upside move we're seeing this week.

That being said, there is the more immediate risk coming in North American trading today with BOC's Patterson due to speak at 1700 GMT as she delivers the economic progress report. However, do take note that her remarks will be published on the central bank's website at 1630 GMT so that is when you should start looking out for comments that could potentially impact the loonie.

If the BOC would want to signal more caution and reiterate a slightly more dovish message to markets, this would be a great opportunity to do so.