USD/CAD turns volatile as oil seesaw after EIA report

Having retested 1.3200 handle for the first time since early August, the USD/CAD pair turned sharply lower and dropped back below 1.3150 before quickly retracing back to currently trade in neutral territory around 1.3175 region.

A fresh bout of US Dollar selling emerged during early US trading session and triggered the initial leg of profit taking move following the pair's relentless up-surge of nearly 400-pips from last week's low near 1.2820 region.

Adding to this, crude oil rebounded sharply after the official EIA report showed an unexpected drop in US crude stockpiles during the week ended September 9, which boosted the commodity-linked currency - loonie and exerted additional selling pressure around the USD/CAD major. However, as oil prices resumed its bearish move, the pair managed to recover its losses and now seems all set to make a fresh attempt towards reclaiming 1.3200 handle.

Technical levels to watch

Bulls will be disheartened only if the pair fails to hold and break below session low support near 1.3140-30 region below which the pair is likely to break through 1.3100 handle and head towards retesting the very important 200-day SMA support near 1.3055-50 region.

Meanwhile on the upside, a sustained move above 1.3200 handle should pave way for continuation of the pair's upward trajectory initially towards 1.3245-50 resistance and eventually beyond 1.3300 handle towards its next major resistance near 1.3400 handle.