Last week, we highlighted how USD/CAD saw a momentary bout of weakness (loonie strength) after the Bank of Canada raised interest rates before reversing sharply back to the topside as oil prices collapsed (see “USD/CAD sees an 80-pip roundtrip as traders weigh BOC rate hike vs. oil weakness” for more).

Looking at the last week’s worth of price action, oil prices have remained under pressure (today’s bounce notwithstanding), and USD/CAD has accordingly continued to strengthen. Looking at the chart, the North American pair went on to form a “bullish engulfing candle” off trendline support last Wednesday, with similar patterns forming on Tuesday and (so far) today. These candles show a big shift from selling to buying pressure and signal that bulls remain eager to join the trend on any brief dips.

(Click on image to enlarge)

Source: TradingView, FOREX.com

As the chart above shows, there’s little in the way of resistance until up at June’s 13-month highs near 1.3390. As long as rates are able to hold above bullish trend line support (currently near 1.3125 and rising by about 10 pips per day), the near-term bullish bias remains intact.

Looking to the economic calendar, USD/CAD traders will be keeping a close eye on tomorrow’s Canadian CPI data, which could help shape the odds of another interest rate hike from the BOC (currently priced as a 50/50 proposition by the central bank’s October meeting). Further afield, Wednesday’s EIA crude oil inventories and Friday’s US Advance GDP report for Q2 could impact trade in the pair.