USD/CAD climbs to 1.3040 after Canadian trade balance data

The USD/CAD pair is building onto its Tuesday's sharp gains and has now risen to session high level after the release of Canadian trade balance data.

Maintaining its strong correlation with crude oil prices, the Canadian Dollar got slammed against its US counterpart on Tuesday. Slump in crude oil prices, accompanied with global risk-off sentiment, continued boosting the USD/CAD pair on Wednesday and the pair is now comfortably trading above 1.3000 psychological mark.

Adding to this, a sharp increase in Canadian trade deficit during the month of May might now provide the required momentum for the pair to break through the very important 100-day SMA resistance. 

It is worth noticing that the pair had repeatedly failed to sustain its move to 100-day SMA and had reversed several times from this important resistance. Hence, the momentum above 100-day SMA would now continue supporting the pair’s upward trajectory in the near-term. 

Moreover, given the ongoing Brexit-led global uncertainty, which is turning out to be US Dollar supportive, the pair seems more likely to continue heading higher in the near-term.

Moving ahead, investors will confront the release of US ISM non-manufacturing PMI and FOMC June meeting minutes, later during NY trading session, ahead of Friday's key NFP report, which might assist traders to determine the near-term direction for the greenback. 

Traders also await the release of weekly US crude supplies data from API on Wednesday, followed by the official report from EIA on Thursday, which would drive crude oil prices and eventually provide momentum for the USD/CAD major.

Technical levels to watch

On a sustained strength above 1.3050 100-day SMA resistance, leading to a momentum above post-Brexit swing highs, now seems to pave way for continuation of the pair's near-term upward trajectory immediately towards 1.3145-50 resistance before heading towards its next major resistance near 1.3275 area. On the flip side, a decisive break below 1.3000 handle, and a subsequent drop below 50-day SMA support near 1.2940, seems to drag the pair back towards testing a short-term ascending trend-line support near 1.2800 round figure mark.