USD/CAD spikes to fresh session tops near mid-1.3600s

The USD/CAD pair staged a goodish recovery from sub-1.3600 level and jumped to fresh session tops near mid-1.3600s region during early European session.

Recovering US treasury bond yields underpinned the greenback demand, helping the key US Dollar Index to recover from multi-month lows, and seems to have triggered a near-term short-covering bounce. The pair's latest leg of up-move could also be attributed to a modest retracement in crude oil prices, which derives demand for the commodity-linked currency - Loonie. 

Market seems to have digested Wednesday's bullish EIA report on US crude oil inventories, with WTI crude oil corrective to sub-$49.00/barrel mark and doing little to stall the pair's rebound from 3-week lows touched in the previous session. 

   •  US crude oil inventories posts sixth straight week of decline - Natixis

Despite of the pull-back, the pair has held within a three-day old narrow trading range as investors seemed reluctant to place fresh bets in wake of the latest bout of political turmoil in the US and ahead of the very important OPEC meeting in Vienna on May 25. 

Next in focus would be the US economic docket, featuring the release of weekly jobless claims and Philly Fed Manufacturing Index, due later during the NA session and would be looked upon to grab some short-term trading opportunities.

Technical levels to watch

On a sustained move beyond mid-1.3600s, a fresh bout of short-covering could accelerate the up-move towards the 1.3700 handle, above which the pair seems poised to aim back towards retesting its next major hurdle near 1.3750 region. Conversely, any retracement from current resistance, and a subsequent drop below 1.3630 level, now seem to find support near the 1.3600 handle.