- USD/CAD staged a modest intraday recovery from multi-year lows set earlier this Wednesday.
- A softer tone around oil prices undermined the loonie and remained supportive of the uptick.
- A subdued USD demand might cap gains ahead of the critical FOMC monetary policy decision.
The USD/CAD pair extended its steady intraday recovery from multi-year lows and edged higher through the first half of the European session. The pair was last seen hovering near daily tops, around the 1.2465-70 region, and has now recovered a major part of the previous day’s losses.
A softer tone surrounding crude oil prices undermined the commodity-linked loonie and was seen as a key factor extending some support to the USD/CAD pair. However, a subdued US dollar demand – amid some cautiousness ahead of the critical FOMC policy decision – failed to provide any additional boost.
From a technical perspective, the pair this week has repeatedly failed to capitalize on its attempted recovery or find acceptance above the key 1.2500 psychological mark. The emergence of some fresh selling at higher levels suggests that the recent bearish trend might still be far from being over.
The negative outlook is reinforced by the fact that technical indicators on 4-hourly/daily charts haven’t been able to recover and remain deep in the bearish territory. Hence, Wednesday’s positive move could be solely attributed to some short-covering ahead of the central bank event risk.
In the meantime, any subsequent positive move might continue to confront a stiff resistance near the 1.2500 mark. The mentioned level coincides with a three-day-old descending trend-line, which should now act as a pivotal point for short-term traders and help determine the near-term trajectory.
A convincing breakthrough, leading to a subsequent move beyond weekly highs, around the 1.2515 region should pave the way for some near-term gains. The USD/CAD pair might then aim back to test the recent trading range support breakpoint, now turned strong resistance near the 1.2575-80 region.
On the flip side, the 1.2445-35 region now seems to act as immediate support. Some follow-through selling will be seen as a fresh trigger for bearish traders and turn the USD/CAD pair vulnerable to accelerate the bearish trajectory towards testing the 1.2300 round-figure mark.
USD/CAD 4-hourly chart
Technical levels to watch
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