USD/CAD surges to 1.2900 handle, will it sustain?

   •  Surging US bond yields helps regain traction.
   •  Upbeat US data provides an additional boost.
   •  Follow-through momentum needed to confirm additional gains. 

The USD/CAD pair gained strong positive momentum during the early NA session and surged to the 1.2900 handle in the past minute. 

Having found decent support near mid-1.2800s, the pair got an additional boost from better-than-expected US housing market data and current account deficit figures, released today. 

Adding to this, a sharp upsurge in the US Treasury bond yields helped the US Dollar to bounce off lows and further collaborated to the pair's strong up-move over the past hour or so.

Meanwhile, the market seems to have largely ignored the prevalent bullish trading sentiment around crude oil prices, which tends to underpin demand for the commodity-linked currency - Loonie, with the USD price dynamics acting as an exclusive driver of the pair's bullish momentum. 

It would now be interesting to see if bulls are able to maintain their dominant position and lift the pair beyond 1.2910-15 supply zone as investors remained cautious regarding progress on the US tax reform front.

Technical levels to watch

Momentum above the 1.2910-15 zone is likely to get extended towards the very important 200-day SMA hurdle near the 1.2935 region, which if conquered should assist the pair to reclaim the key 1.30 psychological mark.

On the flip side, 1.2860-50 area now becomes an immediate support to defend, below which the pair is likely to head back towards testing 1.2800 handle before eventually dropping to 1.2740 horizontal support.