USD/CAD spikes back above 200-DMA, comfortable above 1.2700 handle

   •  USD spikes after Powell’s prepared text of the testimony.
   •  Weaker oil prices offset disappointing US durable goods data.

The USD/CAD pair broke out of its Asian/European session consolidation phase and was now seen building on its momentum beyond the very important 200-day SMA barrier.

A fresh wave of US Dollar buying interest emerged over the past hour or so, supported by a goodish pickup in the US Treasury bond yields, and provided the required momentum to lift the pair back above the 1.2700 handle. 

The USD managed to preserve daily gains and was being supported by the prepared text of the Fed Chair Jerome Powell's first congressional testimony, which indicated that gradual rate hikes will continue. 

Bulls, however, seemed little impressed as the prepared text did not endorse four rate hikes in 2018. Hence, investors are likely to wait for the Q&A session for some fresh clues over the central bank's monetary policy outlook, which might eventually lead to some heavy volatility in the markets. 

Meanwhile, weaker US durable goods order data was partly offset by a negative trading sentiment around crude oil prices, which was seen weighing on the commodity-linked currency - Loonie and remained supportive of the pair's strong bid tone through the early NA session. 

Technical levels to watch

A follow-through buying interest has the potential to continue lifting the pair further towards YTD highs resistance near the 1.2755 region, above which the bullish momentum could get extended towards the 1.2800 handle.

On the flip side, the 1.2700 handle now becomes an immediate support to defend, which if broken might now drag the pair back towards 100-day SMA support near the 1.2630 region.