USD/CAD rebounds and eyes a test 1.2900

• US Dollar recovers after a weak start as Wall Street rallies. 
• USD/CAD up for the day, still below weekly highs.

The recovery of the Loonie was short-lived. The USD/CAD par rose back near the 1.2900 zone during the US session supported by a stronger US Dollar. The greenback strengthened following US data and particularly on hopes for easing tensions between the US and China after US President Trump economic adviser Kudlow confirmed he will joint Treasury Secretary Mnuchin in a trip to China. 

The pair was already posting strong weekly gains on the back of a cautious tone from Bank of Canada Governor Poloz earlier this week. During the European session USD/CAD dropped to test the 1.2810/20 support level. It failed to break lower and rebounded to the upside. 

Recently printed a fresh daily high at 1.2883, slightly below the 3-week high it reached yesterday at 1.2896. Near the end of the session is hovering around daily highs as the DXY extends gains. 

Tomorrow in the US, the first estimate of Q1 GDP growth will be released. It is the key economic number of the week. GDP is expected to  decelerate to 2% from the 2.9% seen at the last quarter of last year. 

USD/CAD Levels to watch 

To the upside, above 1.2880 the next resistance is seen at 1.2900 followed by 1.2945 (Apr 2 high) and 1.2960. On the flip side, support could be located at 1.2855, 1.2810 and 1.2775/80.