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  • USD/CAD retreated over 100 pips from two-week tops set earlier this Thursday.
  • The set-up warrants some caution before placing any aggressive directional bets.

The USD/CAD pair witnessed a turnaround and retreated over 100 pips from two-week tops, around the 1.4175 region set earlier this Thursday. A strong rally in oil prices boosted the commodity-linked loonie and dragged the pair back below the 100-hour SMA for the first since May 1.

Meanwhile, technical indicators on the 1-hourly chart have been drifting lower in the bearish territory and losing momentum on the 4-hourly chart. However, oscillators on the daily chart have managed to hold with a mild positive bias and warrant some caution before placing fresh bearish bets.

Nevertheless, the pair still seems vulnerable to slide further towards challenging 200-hour SMA. This is closely followed by the key 1.40 psychological mark, which should now act as a key pivotal point and help traders determine the pair’s next leg of a directional move.

On the flip side, any attempted recovery move might now confront some fresh supply near the 1.4100 mark. A sustained break through the mentioned barrier, leading to a subsequent move beyond the 1.4120 region might negate any near-term bearish outlook and prompt some fresh buying.

The pair might then accelerate the positive move further towards reclaiming the 1.4200 round-figure mark before bulls eventually aim towards challenging the next major hurdle near the 1.4235-40 supply zone.

USD/CAD 1-hourly chart

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Technical levels to watch