• USD/CAD catches aggressive bids on Tuesday and rallies to over a two-month top.
• Sliding Oil prices undermines the Loonie and lends support amid a strong USD.
• A sustained breakthrough the 100-day SMA supports prospects for further gains.

The USD/CAD pair gains strong positive traction on Tuesday and rallies to over a two-month peak, around the 1.3435 region during the first half of the European session.

Weaker Chinese trade data revives fears about faltering recovery in the world's second-largest economy and weighs heavily on Crude Oil prices. Apart from this, expectations that the Bank of Canada (BoC) will pause its interest rate hike campaign undermine the commodity-linked Loonie. Meanwhile, the prospects for further policy tightening by the Federal Reserve (Fed), along with a softer risk tone, boost demand for the safe-haven US Dollar (USD) and provides a goodish lift to the USD/CAD pair.

Spot prices, however, pause near a resistance marked by the 61.8% Fibonacci retracement level of the May-July downfall, though the technical setup supports prospects for a further near-term appreciating move. Acceptance above the 50% Fibo. level and a subsequent strength beyond the 1.3400 mark, or the 100-day Simple Moving Average (SMA), was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are placed comfortably in the positive territory and are still far from being in the overbought zone.

That said, the Relative Strength Index (RSI) on the 1-hour chart has moved on the verge of breaking above the 70 mark and is seen holding back traders from placing fresh bullish bets around the USD/CAD. Hence, it will be prudent to wait for some follow-through buying beyond the 1.3435 area or intraday consolidation before positioning for any further gains. Nevertheless, spot prices remain on track to prolong the recent recovery move from the YTD low set in July and aim to reclaim the 1.3500 psychological mark.

On the flip side, the 1.3400 mark, or the 100-day SMA, now seems to protect the immediate downside ahead of the 50% Fibo. level, around the 1.3375-1.3370 area. This is followed by support near the mid-1.3300s and the 1.3300 mark (38.2% Fibo. level). Any subsequent downfall is more likely to attract fresh buying near the 1.3250 horizontal support and remain limited near the 1.3225 region, or the 23.6% Fibo. level. That said, some follow-through selling will negate the positive bias and darg the USD/CAD pair below the 1.3200 mark.

Spot prices might then accelerate the slide towards the 1.3160-1.3150 intermediate support before eventually dropping to challenge the 1.3100 round figure.