USD/CAD rises back above 1.2550 after hitting fresh 8-week lows

• Spot hits fresh monthly lows amid stronger CAD ahead of BoC meeting. 
• US and Canadian economic data above expectations. 

The USD/CAD pair dropped to 1.2539 after the beginning of the US session, reaching the lowest levels since February,19. It quickly rebounded rising back above 1.2550. 

Despite moving of daily lows, the intraday bias points to the downside, but momentum is not so strong. During most of the day, USD/CAD has been moving sideways, with the upside finding resistance at 1.2580 and on the opposite direction, is being rejected from below 1.2550.  If the pair drops and holds under 1.2550, the bearish pressure is likely to increase, exposing daily lows. 

Economic data

US data released today surpassed expectations. Housing Starts and Building Permits came in at 1.319 million and 1.354 million units, both reading above market consensus. Later, Industrial Production data showed an increase in output of 0.5% in March, above the 0.4% expected. The data offered support to the US Dollar. 

In Canada, Manufacturing Shipments in February climbed 1.9% against the 1.1% expected. The Loonie gained momentum after the data, reaching fresh highs versus most of its rivals. 

Risk appetite and Canadian data are offering support to the Loonie ahead of the central bank meeting. No change in rates is expected but analysts are starting to consider a potential hike later during the year. 

Levels to watch 

To the downside, support levels might be seen at 1.2540, followed by 1.2520 and 1.2500. On the flip side, resistance could be located at 1.2575 (daily high), 1.2620/25 (Apr 11 & 16 high) and 1.2675.