USDCAD gained significant buying traction early on Friday with the price quickly recouping earlier losses to jump above 1.2700 again. The positive slope in the RSI and the growing stochastic are endorsing the current bullish momentum in the price.
A rally higher could reduce negative risks, producing another bullish extension towards the key levels of 1.2850 and 1.2900. Beyond that, traders will target the eight-month high of 1.2950, a break of which would re-activate the uptrend that started last June, Though, any steps higher could be limited if a new barrier pops up near the 1.3000 psychological mark.
Otherwise, if sellers take the lead, the pair may pull back to test the nearby support of 1.2600. Falling lower, the 40-day simple moving average (SMA) at 1.2545, while not far below, the 200-day SMA at 1.2470 could block the way towards the 1.2390 low and 1.2285.
Overall, USDCAD is strengthening the bullish trend in the short-term, but some caution is warranted as the price is swiftly approaching the crucial boundary set around 1.2850.