• A combination of factors pushes USD/CAD to its highest level since November 2020 on Monday.
• The formation of an ascending trend channel points to a well-established short-term bullish trend.
• The technical set-up favours bullish traders and supports prospects for a further appreciating move.

The USD/CAD pair builds on last week's stronger US CPI-inspired rally from the vicinity of mid-1.2900s and gains some follow-through traction on Monday. The pair maintains its bid tone through the early North American session and is currently placed just above the 1.3300 mark, or the highest level since November 2020.

The US dollar is back in demand amid firming expectations that the Fed will deliver a supersized rate hike at the end of a two-day policy meeting on Wednesday. Apart from this, bearish crude oil prices continue to undermine the commodity-linked loonie and remain supportive of the USD/CAD pair's ongoing positive momentum.

Looking at the broader picture, the recent move up along a multi-month-old ascending channel points to a well-established short-term bullish trend. This, along with last week's convincing break through the 1.3210-1.3220 supply zone and a subsequent move beyond the 1.3300 mark, supports prospects for additional gains.

The constructive set-up is reinforced by the fact that technical indicators on the daily chart have been gaining positive traction and are still far from being in the overbought territory. Hence, some follow-through strength towards the ascending channel resistance, around the 1.3400 mark, looks like a distinct possibility.

On the flip side, any meaningful corrective decline could find decent support near the 1.3220-1.3210 resistance breakpoint. Any further pullback below the 1.3200 mark could be seen as a buying opportunity and remain limited near the 1.3160-1.3150 region. The latter should now act as a strong base for the USD/CAD pair and a pivotal point.

USD/CAD daily chart

Key levels to watch