“¢ A modest USD retracement exerts some downward pressure on Tuesday.
“¢ Bullish crude oil prices underpin Loonie and add to the selling bias.
“¢ Technical selling to emerge below 100-DMA and accelerate the downfall.
The USD/CAD pair met with some fresh supply on Tuesday and has now dropped back to the very important 100-day SMA support.
The pair’s attempted recovery move at the start of a new trading week met with some fresh supply near the 1.3040 level, with a modest US Dollar retracement exerting some additional downward pressure through the early European session on Tuesday.
Adding to this, a follow-through positive momentum around crude oil prices underpinned the commodity-linked currency – Loonie and further collaborated to the pair’s slide to an intraday low level of 1.2965, or near eight-week lows.
It would now be interesting to see if the pair continues finding some support at current levels or a follow-through selling pressure confirms a bearish breakdown and opens room for a fresh leg of near-term downfall.
Traders now look forward to the second-tier economic data – Canadian Ivey PMI and JOLTS Job Openings data from the US, in order to grab some short-term opportunities.
Meanwhile, the biggest data point of the week will be the US consumer inflation figures, which along with monthly Canadian jobs report on Friday will play a key role in determining the pair’s near-term trajectory.
Technical levels to watch
A follow-through selling has the potential to continue dragging the pair further towards 1.2930 intermediate support en-route the 1.2900 round figure mark. On the flip side, the key 1.30 psychological mark might now hinder any immediate recovery attempt and is followed by resistance near the 1.3035-40 region.
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