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  • USD/CAD refreshed two-week tops, albeit struggled to find acceptance above the 1.2600 mark.
  • A goodish rebound in oil prices underpinned the loonie and capped the upside for the pair.
  • The set-up supports prospects for a move towards 50-day SMA, around the 1.2655 region.

The USD buying interest picked up pace during the early European session and pushed the USD/CAD pair beyond the 1.2600 mark, or near two-week tops in the last hour, though lacked follow-through.

The mentioned level coincided with the 61.8% Fibonacci level of the 1.2737-1.2365 slide in March. A sustained move beyond might have already set the stage for an extension of the recent strong rebound from over three-year lows touched last week.

The constructive outlook is reinforced by the fact that oscillators on the daily chart have fully recovered from the bearish territory. That said, RSI (14) on hourly charts has moved on the verge of breaking into the overbought territory.

Moreover, the USD/CAD pair’s inability to capitalize on its strength above the 1.2600 mark warrants caution for bullish traders. A goodish bounce in crude oil prices seemed to underpin the commodity-linked loonie and capping the upside.

Nevertheless, the USD/CAD pair still seems poised to gain some follow-through traction and aim to test the 50-day SMA hurdle, currently near the 1.2655 region. Some follow-through buying will set the stage for additional near-term gains.

On the flip side, any meaningful pullback might be seen as a buying opportunity near the 50% Fibo. level, around mid-1.2500s. This coincides with the 50-hour SMA and should now act as a key pivotal point for short-term traders.

Sustained weakness below might trigger some technical selling and turn the USD/CAD pair vulnerable to slide back towards the key 1.2500 psychological mark, representing the 38.2% Fibo. level.  

USD/CAD 1-hourly chart

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Technical levels to watch