USD/CAD erases losses as USD jumps boosted by Yellen

USD/CAD rose from 1.3023 (1-week low) to levels above 1.3070, erasing daily losses in minutes. The pair climbed boosted by a rally of the US dollar in the market. The greenback gained momentum with Janet Yellen’s testimony at the Senate Banking Committee. 

The Fed’s Chair mentioned that more rate hikes may be appropriate in upcoming meetings and triggered a rally of the USD and a decline in US bonds. Crude oil reached fresh highs, but then pulled back to the level it had before Yellen’s speech. Now she is about to start answering questions from members of the Committee. 

Levels to watch 

The pair peaked at 1.3075 and it was trading at 1.3070, the same level it closed yesterday. Despite the recovery, price continues to move within a bearish channel. 

A key resistance could be seen at 1.3105/10, where the downtrend line of the mentioned channel stands. A break higher, could open the doors to a more sustained recovery of the pair. 

To the downside, the area around 1.3035 is becoming an important support. Below here the next level to watch is the 1.3000 handle: a daily close below that level would be a signal of a bearish continuation.