USD/CAD rises to highest in almost three weeks above 1.2630

• US Dollar rises across the board on higher yields.
• USD/CAD remains bullish, looking at 1.2650.

The USD/CAD broke above 1.2625 and climbed to 1.2646, reaching the highest level since March 10. The pair then pulled back modestly, and is it hovering around 1.2630, about to post the second daily gain in a row.

The deterioration in market sentiment and the US dollar's ongoing strength pushed USD/CAD further to the upside. US yields are moving higher. The 10-year yield hit earlier at 1.77%, a fresh one-year high. The Dow Jones is falling 0.12% and the Nasdaq 0.35%.

Economic data in the US came in better-than-expected. The CB Consumer Confidence Index jumped to 109.7 in March against expectations of 96.9. The key report of the week will be on Friday with April’s Non-farm payrolls.

Short-term outlook

The bullish outlook in USD/CAD remains intact. Price found resistance at the 55-day simple moving average and the 1.2650 area. A break above would point to further gain in the short-term. The next barrier is seen at 1.2685.

The 20-day moving average stands at 1.2562 and is offering support to the bullish bias. A daily close clearly below would alleviate the pressure on the loonie, suggesting a possible test of 1.2500.

For the USD/CAD to correct lower, market conditions should favor a decline in US bond yields and that risk appetite continues to prevail among investors.

Technical levels