USD/CAD leaps above 1.23 on BoC's Lane's comments

The USD/CAD pair gathered strength in the late NA session and jumped above the 1.23 handle to refresh its highest level since September 6 at 1.2338. As of writing, the pair was trading at 1.2320, gaining more than 120 pips, or 1.05% on the day.

The pair's sudden upsurge in the last hour seems to be a product of a broad-based CAD sell-off that had been triggered by the BoC Deputy Governor Tim Lane's comments before the Saskatoon Regional Economic Development Authority. The fact that the EUR/CAD pair also recorded a 100-pip leap supports the view of the loonie losing strength.

In his prepared remarks, Lane reiterated that the Canadian economy's growth was becoming more broadly-based and self-sustaining. However, he also noted that the trade negotiation outcomes could have implications for the economy, which would force them to consider in conducting the monetary policy. "Given the complexity of effects of material changes, we cannot adjust monetary policy in anticipation of these risks," Lane further added.

• BoC's Lane: Data show growth in Canada is becoming more broadly based, self-sustaining

On the other hand, the US Dollar Index is sticking to its daily modest gains near the 92 mark, providing an additional boost to the pair. At the moment, the DXY is at 91.90, up 0.26% on the day.

Technical outlook

With this recent upsurge, the RSI indicator on the daily graph broke above the 70 handle, suggesting that the pair is technically overbought and could be looking to make a technical correction before extending its gains. With a daily close above 1.2300 (psychological level/20-DMA) the pair could aim for 1.2410 (Sep. 6 high), 1.2475 (50-DMA) and 1.2550 (Aug. 29 high). On the flip side, supports could be encountered at 1.2300 (20-DMA), 1.2165 (10-DMA) and 1.2080 (Apr. 27, 2015, low).