USD/CAD clings to strong gains above 1.3200 handle

Building on to its bullish break-out above 200-day SMA and a subsequent break through 1.3200 handle, the USD/CAD pair maintained its strong bid tone and is currently hovering around 7-week high. 

Recent weakness in crude oil has been the key factor weighing on the Canadian Dollar and contributing to the pair's ongoing strong bullish momentum from a 3-week low touched during the early part of previous week. 

Moreover, the greenback continues to find support at lower level as markets seem convinced over possibilities of an eventual Fed rate-hike action in 2016, albeit with slim chances of a move at next week's meeting. 

Focus now shifts to a slew of macro releases from the US, which includes - monthly retail sales, weekly jobless claims, regional manufacturing PMI and industrial production data, which would help investors evaluate possibilities of a September Fed rate-hike action and eventually drive the pair in the near-term. 

Technical levels to watch

From current levels 1.3254 (July monthly high) seems to act as immediate resistance above which the pair is likely to dart towards 1.3296 (March 24 high) before heading towards reclaiming 1.3400 handle. On the flip side, 1.3200-1.3190 area now becomes immediate support to defend, which if broken seems to drag the pair towards 1.3135-30 horizontal support. Any further weakness below 1.3135-30 support is likely to be short-lived and hence, is likely to be bought into near 1.3100 handle.