USD/CAD recovers early lost ground to 2-week lows, testing highs above mid-1.3400s

Having dropped to nearly two-week lows, the USD/CAD pair seems to have gained some traction and snapped three consecutive day of losing streak.

The pair's latest leg of up-move over the past couple of hours could be attributed to a strong follow through greenback buying interest. A sharp slump in the EUR/USD major, on ECB headlines, provided extra legs to US Dollar's recovery move from 7-month lows.

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Meanwhile, a softer tone surrounding oil markets, with WTI crude oil holding weaker below $48.00 mark, further weighed on the commodity-linked currency - Loonie, and collaborated to the pair's sharp spike to session tops near 1.3455 region.

It, however, remains to be seen if the up-move is backed by any genuine buying interest or has been solely driven by short-covering as investors are likely to remain cautious ahead of former FBI Director James Comey's testimony on Thursday.

With an empty economic docket, the pair remains at the mercy of broader market sentiment surrounding the greenback and oil price-dynamics and hence, focus would remain on the official EIA data on US crude oil inventories, due later during the NY session. 

Technical levels to watch

From current levels, 1.3470-75 area seems to act as immediate resistance, above which a fresh bout of short-covering could lift the pair back above the key 1.35 psychological mark towards 1.3515 strong hurdle.

On the downside, sustained weakness below 1.3430 level would turn the pair vulnerable to head towards testing the 1.3400 handle before eventually dropping to 1.3385-80 support area.