USD/CAD was up earlier to a high of 1.2449 but is now tracking lower to the lows for the day at 1.2418 as the loonie regains some momentum after a sluggish week against the dollar, despite higher oil prices in the lead up to the OPEC+ decision.
That may tell us quite a bit of how solid the dollar's performance has been and from a technical perspective, it has seen USD/CAD break above 1.2400 and even its 100-day moving average (red line) once again - after having briefly done so in June.
Last month, the break against the latter technical level was short-lived as buyers failed to get close to contest the 1.2500 level and so the highs then @ 1.2481-87 offers a key resistance region going into the US jobs report later today.
Given the hawkish tilt by the BOC, you'd have to figure that the latest bounce since mid-June owes much to a technical rejection of 1.2000 at its first attempt.
But if the BOC is going to play it slow now that the Fed itself is starting to turn the other cheek, then loonie gains may be less straightforward to come by than it was in the opening five months of the year.
If we break back above 1.2500, I can see this heading towards the 200-day moving average (blue line) @ 1.2670 next.
That said, with the BOC likely to push forward with its agenda, the Canadian economy looking more optimistic, and oil prices to stay more upbeat, it is tough to fit the solid fundamental backdrop that is supporting the loonie at the moment.
As mentioned before, on the balance of things, I would argue that USD/CAD is likely headed towards another test of 1.2000 but that conviction isn't what it was pre-FOMC.
The technical element now is also part of the consideration, with dollar gains ahead of the payrolls later adding to the recent upside pressure in the pair.
As such, as mentioned before, there is a stronger argument that this latest shift in the landscape calls for a stronger loonie against the likes of the franc and yen in the long-term, given rate differentials and policy/economic divergence.
But of course, timing is everything so be wary of potential retracements considering how CAD/JPY was already the best performer in 1H 2021.