- USD/CAD struggled to capitalize on its intraday positive move and failed near the 1.2700 mark.
- Investors await a sustained move beyond a descending trend-line before placing bullish bets.
- Dips towards daily swing lows might still be seen as a buying opportunity and remain limited.
The USD/CAD pair quickly retreated nearly 50 pips during the early North American session and was last seen trading with modest gains, just above mid-1.2600s, nearly unchanged for the day.
The US dollar kicked off the new week on a strong footing and jumped to three-and-half-month tops. Apart from this, a pullback in crude oil prices undermined the commodity-linked loonie and extended some support to the USD/CAD pair. Despite the supporting factor, bulls struggled to push the pair beyond 50-day SMA, around the 1.2700 mark. The mentioned level coincides with a five-week-old descending trend-line and should now act as a pivotal point for short-term traders.
Meanwhile, technical indicators on the daily chart – though have managed to recover from the negative territory – are yet to confirm a near-term bullish bias. Moreover, oscillators on hourly charts have been struggling to gain any meaningful traction. The technical set-up warrants some caution for bullish traders. This further makes it prudent to wait for a sustained move beyond the 1.2700 mark before positioning for any meaningful upside for the USD/CAD pair amid absent relevant economic data.
That said, a convincing breakthrough might provide a goodish lift to the USD/CAD pair and assist bulls to make a fresh attempt to clear a strong barrier near the 1.2740-50 supply zone. The subsequent move up will set the stage for additional near-term gains. The USD/CAD pair might then accelerate the positive move and aim to reclaim the 1.2800 round-figure mark for the first time since early February. The latter coincides with another descending trend-line resistance and might cap the upside.
On the flip side, the daily swing lows, around the 1.2625-20 region should continue to protect the immediate downside. Any subsequent slide might attract some dip-buying and remain limited near the 1.2575 strong horizontal support. Failure to defend the mentioned support levels might prompt some technical selling and turn the USD/CAD pair vulnerable. The downfall might then drag the pair back towards the 1.2500 psychological mark en-route multi-year lows near the 1.2470-65 region.
USD/CAD daily chart
Technical levels to watch
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