USD/CAD retreats from 3-week tops, still holding above 1.34 ahead of data

The USD/CAD pair built on previous session's sharp rebound from 100-day SMA support and is currently navigating just a few pips away from 3-week tops near mid-1.3400s touched in the past hour. 

Spot benefitted from a mildly weaker sentiment surrounding WTI crude oil, which tends to weigh on the commodity-linked currency - Loonie. Adding to this, a follow through greenback strength, with the key US Dollar Index holding with modest gains around mid-100.00s, remained supportive of the pair's strong up-surge for the second consecutive session.

Meanwhile, market participants seems to have largely ignored Monday's release of BOC's Business Outlook Survey that revealed a modest recovery in business sentiment on the back of signs of strengthening demand, with the greenback price-dynamics being an exclusive driver of the pair's momentum through mid-European trading session on Tuesday.

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Today's economic docket features the release of trade balance data from the US and Canada, along with factory orders data from the US, and would be looked upon for some fresh trading impetus during early NA session.

Technical levels to watch

Momentum above 1.3450 level is likely to get extended towards 1.3475-80 horizontal resistance, above which the pair is likely to reclaiming the key 1.35 psychological mark and head towards testing 2-1/2 month highs resistance near 1.3535 level touched on March 9.

On the downside, 1.3415-10 area now seems to protect immediate downside, which if broken is likely to accelerate the slide back towards 1.3385-80 horizontal support ahead of its next support near 1.3355-50 area.