USD/CAD rebounds from two-week lows, hits fresh daily highs above 1.2500

• US dollar gains momentum during the American session amid higher US yields.
• Risk appetite fades, and crude oil prices retreat.
• USD/CAD bounces after Wednesday’s slide, back above 1.2500.

The USD/CAD broke above 1.2500 and climbed to 1.2521, hitting a fresh daily high. It remains near the top with a bullish tone amid a stronger US dollar.

CAD trims Wednesday’s gains

The USD/CAD extended Wednesday’s slide in European hours and bottomed at 1.2457, the lowest level in two weeks. Yesterday, Canadian inflation data came in above expectations, with the annual headline at 6.7%., the highest since February 1991. Last week the Bank of Canada raised the key rate by 50 bp, and another such hike is expected at the next meeting June 1.

The USD/CAD is accelerating to the upside, trimming some of Wednesday’s losses amid a stronger US dollar. The DXY turned positive and is back at 100.50, after bottoming hours ago at 99.82.

Higher US yields are pushing the greenback to the upside. The US 10-year rose from 2.85% to 2.94%, while the 30-year climbed from 2.89% to 2.98%. The sell-off in Treasuries took place following comments from Fed’s officials. Mary Daly mentioned they will likely raise rates by 50 bps at some meetings.

Negative pressure alleviates

The recovery back above 1.2505 alleviated the negative momentum. If the USD/CAD keeps rising, the next resistance stands at 1.2550 followed by 1.2580. A decline back below 1.2500 should put the pair back into a negative very short-term outlook. The key support stands at 1.2460: a consolidation below would open the door to more losses and a potential decline to 1.2405 (April 5 low).

Technical levels