USD/CAD refreshes weekly top, lacks follow-through beyond 1.3500 and remains below 100 DMA

• USD/CAD touches a fresh weekly high on Friday, though remains below the 100-day SMA.
• Sliding Oil prices undermines the Loonie and lends support amid a modest USD strength.
• A positive risk tone caps the safe-haven buck and caps any further gains for the major.

The USD/CAD pair attracts some buying near the 1.3475 region on Friday and climbs to a fresh weekly high heading into the North American session. The pair is currently placed around the 1.3500 round-figure mark, up for the second straight day, with bulls now awaiting a move beyond the 100-day Simple Moving Average (SMA) before placing fresh bets.

Crude Oil prices remain under some selling pressure for the third successive day amid doubts over fuel demand this year, led by concerns about a global economic slowdown. The worries resurfaced following the release of the mixed Chinese inflation figures and weaker US labor market data on Thursday, which continue to weigh on the black liquid. This, in turn, is seen undermining the commodity-linked Loonie, which, along with some follow-through US Dollar (USD) buying, acts as a tailwind for the USD/CAD pair.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, hits a nearly two-week high in the wake of a modest uptick in the US Treasury bond yields. That said, the uncertainty about the Federal Reserve's (Fed) next policy move might hold back the USD bulls from placing aggressive bets and cap gains for the USD/CAD pair. In fact, the US CPI report released earlier this week pointed to signs of easing inflationary pressures and might allow the Fed to pause its year-long rate-hiking cycle.

Investors, however, remain divided over the possibility of rate cuts later this year. Apart from this, concerns about the US debt ceiling and a generally positive risk tone might further contribute to keeping a lid on the safe-haven buck. This makes it prudent to wait for a sustained move beyond a technically significant 100-day SMA before positioning for an extension of the USD/CAD pair’s weekly rise from the 1.3315 region. Traders now look to the release of the Preliminary Michigan US Consumer Sentiment Index for a fresh impetus.

Technical levels to watch