USD/CAD clings to strong gains at fresh yearly tops

The USD/CAD pair extended previous session's sharp recovery move from the 1.3400 neighborhood and spiked to the highest level since Dec. 28, around 1.3560 region.

Spot continued scaling higher and built on to its break-out momentum beyond the key 1.35 psychological mark. The Canadian Dollar is being weighed down by overnight news that the US President Donald Trump plans to impose 20% tariff on soft lumber imports from Canada. 

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Adding to this, the prevalent bearish sentiment surrounding oil markets, with WTI crude oil struggling to register any meaningful recovery after six consecutive days of losses, has failed to extend any support to the commodity-linked currency - Loonie, and stall the pair's ongoing up-surge to yearly tops. 

Meanwhile, a modest US Dollar up-tick, against the backdrop of expected tax cut plans by the Trump administration, further collaborated to the strong bid tone surrounding the major. 

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Traders now look forward to the US economic docket, featuring the release of CB Consumer Confidence Index and new home sales data for some fresh impetus. 

Technical levels to watch

From current levels, 1.3575-80 area is likely to act as immediate resistance, above which the pair is likely to surpass the 1.3600 handle and aim towards testing its next major hurdle near 1.3640-45 region. 

On the downside, retracement back below 1.3525-20 immediate support now seems to find support near the 1.35 handle, which is closely followed by a strong horizontal support near 1.3465 level.