USD/CAD testing session tops near 1.3465 region

The USD/CAD pair held with minor gains and eroded part of Friday's rejection move from the key 1.35 psychological mark.

An upward revision of the US GDP growth numbers on Friday supported the US Dollar's recovery move from 6-1/2 month lows touched last week and lifted the pair back above mid-1.3400s. Adding to this, a modest retracement in oil prices, with WTI crude oil failing to sustain early move back above the key $50.00 mark, further weighed on the commodity-linked currency - Loonie, and collaborated to the bid tone surrounding the major.

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It, however, remains to be seen if the pair is able to build on early gains amid holiday-thinned subdued trading action on Monday. The US markets would remain closed in observance of Memorial Day and the pair seems more likely to remain confined within Friday's trading range.

Looking at the broader picture, the pair now seems to have entered a consolidation phase, following last week's slump to over one-month lows, sub-1.3400 level, and hence, it would be prudent to wait for a follow through strength above the 1.35 handle before confirming that the pair might have bottomed out in the near-term.

Technical levels to watch

On a sustained break through the 1.35 handle, a bout of short-covering could lift the pair towards 1.3535-40 horizontal resistance en-route 1.3575-80 strong hurdle. On the flip side, 1.3440-35 area now seems to protect immediate downslide, which if broken is likely to accelerate the slide back towards the 1.34 round figure mark.