USD/CAD headed toward the highest close in a month

The Loonie fell against the dollar on Monday, as it continues to retreat after reaching on August the highest level in two years. 

USD/CAD hovering around 1.2500

The pair peaked today at 1.2523, slightly below last week highs and then pulled back. It found support at 1.2480 and near the end of the session it was trading at 1.2510, about to post the highest daily close since August 30. 

Today USD/CAD  approached  September highs but lost strength near the 1.2530 zone. The decline from the highs was limited suggesting that the Loonie remains weak. 

The upside is being supported by a stronger US dollar, higher US bond yields, a widening in the spread with Canadian bonds and by the latest round of US data. Today the US Manufacturing PMI and the ISM manufacturing index, both rose above expectations, showing that activity remained strong in September. 

US ISM Manufacturing: Factory sector rides out recent storms - Wells Fargo

The Canadian dollar was also affected on Monday by the decline in crude oil prices. The West Texas Intermediate lost 2%. It reached the lowest in 13 days but WTI was able to hold above $50.00 a barrel.

WTI tumbles further, closer to $50.00

USD/CAD significant levels

To the upside, the immediate resistance is seen at 1.2530 (last week high) followed by 1.2550 and 1.2605 (Aug 21 high). On the flip side, support levels might lie at 1.2460 (Oct 2 low), 1.2415 (Sep 28 & 29 low) and 1.2365 (Sep 21 high). The current bullish bias is likely to remain intact as long as it holds above an uptrend line that currently stands at 1.2400/20.