By Ketki Saxena
Investing.com -- The Canadian dollar strengthened against its U.S. counterpart today, continuing its rebound from a five-month low as oil prices held near 10-month highs, and as risk appetite improved.
Crude prices remained near 10-month highs on expectations of Saudi and Russian output cuts being extended till the end of 2023. Crude prices were also supported by the prospect of an improved demand scenario from China, on hopes that rebounding inflation in China could lead to the 1-year Medium Loan Financing rate being trimmed as early as Friday.
The Canadian dollar is also getting a tailwind from Friday's stronger-than-expected domestic jobs data helped revise bets that the Bank of Canada may still have some room left to take rates higher.
Meanwhile, the risk on trade reflected in equities weighed on the safe-haven U.S. dollar ahead of US CPI data - the impetus for the pair is likely to be relatively restrained until the release of US inflation figures on Wednesday.
On a technical level for the USD/CAD pair, analysts at FX Street note, "Any follow-through buying above the.. high of May 31 at 1.3650 will pave the way to 1.3670 (a high of September 5)"
"On the flip side, a decisive break below the 1.3600 will see a drop to 1.3575 (100-hour EMA). Further south, the next downside stop is seen at 1.3550 (a low of August 30). The next contention level is located at the 1.3495-1.3500 region, indicating a psychological round mark and a low of September 1."