USD/CAD extends recovery, moves back closer to 100-DMA

The USD/CAD pair's recovery move, from the vicinity of 1.3200 handle, picked-up pace in the last hour, lifting it to fresh session peak.

Currently trading around 1.3270 region, the pair has now moved back within striking distance of 100-day SMA amid broad based greenback recovery. In fact, the key US Dollar Index staged a goodish recovery on Tuesday from sub-100.00 mark, the lowest since mid-November touched in wake of the US President Donald Trump's protectionist stance.

Meanwhile, Trump's decision to withdraw the US from Trans-Pacific Partnership (TPP) is fueling market concerns as to how NAFTA renegotiations might unfold and is collaborating to some selling pressure around the Canadian Dollar. 

The pair also seems to have broken its high-degree of correlation with crude oil prices, which tends to drive demand for the commodity-linked currency - Loonie, and US Dollar price dynamics remains the sole driver of the pair's near-term movement.

Today’s US economic docket, featuring the release of flash US manufacturing PMI and existing home sales data, might provide some impetus for short-term traders.

Technical levels to watch

Immediate upside resistance is seen at 100-day SMA near 1.3275-80 region above which the pair is likely to surpass 1.3300 handle and head towards testing 50-day SMA strong hurdle near 1.3340 region.

On the flip side, 1.3235-30 area now seems to protect immediate downside, which if broken might now drag the pair back towards 1.3200 round figure mark. A follow through selling pressure below 1.3200 handle is likely to accelerate the slide further towards 1.3175 horizontal support.