USD/CAD jumps back above 1.2800 handle

A fresh bout of US Dollar buying interest seems to have emerged that helped the USD/CAD pair recover from session low and move back above 1.2800 handle to currently trade at session high level.

Stronger US Dollar is hurting demand for dollar-denominated commodities - like oil, which is weighing on currency-linked currencies - like the Canadian Dollar. 

Moreover, risk aversion also seems to have resurfaced after the latest Brexit polls from IG Survation showed only a marginal lead of only 1% to the 'Remain' camp, fueling uncertainty over the outcome of Thursday's UK-EU referendum. 

With a high degree of correlation with crude oil prices, investors now look forward to key US crude oil inventories data, in order to determine further direction for the USD/CAD pair. Also in focus would be the Fed Chair Janet Yellen's testimony on the Semiannual Monetary Policy Report before the Senate Banking Committee.

Technical levels to watch

A follow-up strength has the potential to boost the pair immediately towards 1.2845-50 resistance, above which the pair seems to aim towards testing 20-day SMA resistance near 1.2880-85 region. A convincing break through 20-day SMA has the potential to lift the pair beyond 1.2900 level towards testing 50-day SMA resistance near 1.2940-50 region.

Meanwhile on the downside, reversal back below 1.2800 level might continue to find support near 1.2770-60 horizontal zone, which if broken seems to drag the pair immediately towards 1.2700 handle. A follow through selling pressure would now open room for extension of the pair's depreciating move, below 1.2600 round figure mark, towards 1.2555-50 support area.