USD/CAD testing critical resistance on 1.27 handle

Currently, USD/CAD is trading at 1.2720, up 0.32% on the day, having posted a daily high at 1.2727 and low at 1.2669.

USD/CAD continues to make its advances having penetrated the 1.27 handle and is pressuring a key resistance level as 16th August 2016 lows. WTI dropping heavily has set the bulls off and oil prices continues to bleed towards the mid way point of the 47 handle. 

Dollar Index gains momentum and rises to test Friday’s highs

"The narrowing of 2-year US-Canadian rates has been extreme and we think a 2H17 recovery in the US economy - coupled with softer macro data in Canada - should see a partial reversal. This points to upward pressure in USD/CAD towards 1.3000. CPI data (Fri) will be a big test of the market's expectation for another BoC hike in 2017. A negative core surprise will see CAD unwind further," explained analysts at ING Bank. 

WTI headed for a test of the key $47.80 level?

USD/CAD levels

"Given the extent of the USD slide (and the absence of any real rebound) since May, we still rather think a USD recovery could extend to the 1.28/1.29 range in the next few weeks," argued analysts at Scotiabank, adding, "however, the odds of more, significant USD gains do look a little slimmer at the moment. Near-term, we look for 1.2650/1.2750 to contain the USD’s range and we have to lean a bearish on the outlook for near-term risks while 1.2750 caps. Bearish."