The Canadian Dollar has traded on its front foot so far this week. Loonie's strength seems to stem largely from USD/CAD and GBP/CAD declining by 50-pips and 170-pips respectively from last Thursday’s close. Canadian Dollar bulls are likely piggybacking on the continuation of broad US Dollar weakness and a retracement by the Sterling as Brexit deal optimism simmers.

USD/CAD PRICE CHART: DAILY TIME FRAME (18 AUG TO 29 DEC 2020)

USD/CAD price action now hovers right around the 1.2800-handle. The major currency pair might find a bit of buoyancy around this level, which is underpinned by its 20-day simple moving average. That said, breaching the 1.2800-price level might motivate USD/CAD bears to make a push back toward month-to-date lows.

This potential area of technical support was forged with help from Bank of Canada Governor Macklem, who jawboned the Loonie with dovish commentary by stating that recent Canadian Dollar appreciation is ‘significant’ and on the central bank’s radar, adding that CAD strength does not reflect domestic factors.

GBP/CAD PRICE CHART: DAILY TIME FRAME (17 AUG TO 29 DEC 2020)

GBP/CAD price action seems to have drifted lower as the Pound Sterling surrenders recent gains due to fading Brexit deal optimism. This coincided with another reaction to technical resistance highlighted by the 1.7500-handle. GBP/CAD currently gravitates slightly above its 50-day simple moving average, however, and could soon see a resumption of buying pressure near this technical barrier.