USD/CAD up 0.2% to back above 1.2600 in trading today

The pair is up slightly as risk trades take a bit of a breather following the two-day rally to start the new week. The dollar is taking some light comfort in that but it isn't enough to really signify any change to the technical picture just yet.

USD/CAD H1 25-08

Price action continues to reside below the key hourly moving averages, notably keeping below the 200-hour moving average (blue line) at 1.2658. Keep below that and sellers stay in near-term control, limiting any further upside bounce in the pair.

Essentially, the dollar is seeing a light pullback but nothing significant despite the light gains as we get into things in European morning trade.

As such, sellers are still looking poised to try and work towards a test of the 200-day moving average next. A look at the daily chart:

USD/CAD D1 25-08

As mentioned previously, a lot still rides on Jackson Hole later in the week and there might be room for more push and pull in the days ahead.

However, I don't believe how Powell & co. will offer anything on the taper front and that means they aren't going to spoil the risk party; in turn, validating the loonie's latest run.