USD/CAD extends overnight strong up-move, gains further beyond 1.25 handle

The USD/CAD pair built on overnight strong gains and has now moved above the key 1.25 psychological mark, highest since late August. 

On Wednesday, the pair rallied hard after the BoC Governor Stephen Poloz said that there is no predetermined path for rate hikes and that the central bank would proceed with caution. The less hawkish rhetoric dampened expectations for any more rate hike this year and weighed heavily on the Canadian Dollar. 

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Meanwhile, the market now seemed convinced that the Fed would deliver one more rate hike in 2017. This coupled with optimism over the US President Donald Trump's proposal for the biggest US tax overhaul in three decade helped the US Dollar to extend its recent rally and further collaborated to the pair's strengthening move.  

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Adding to this, a minor retracement in crude oil prices further dented demand for the commodity-linked currency - Loonie and also seems to have prompted some additional short covering, especially after yesterday's bullish break above 50-day SMA hurdle. 

Later during the NA session, investors will confront some more economic data from the US. The final reading on second quarter GDP and the usual weekly jobless claims would be the key highlights and would now be looked upon for some fresh impetus.

Technical levels to watch

The ongoing momentum seems strong enough to get extended towards the 1.25550-55 region, above which the pair seems all set to aim towards reclaiming the 1.2600 handle.

On the flip side, any retracement back below the 1.25 handle now seems to find strong buying interest at 50-day SMA, currently near the 1.2465 region, which if broken could drag the pair back towards the 1.2400 handle.