- USD/CAD retreated further from a descending trend-line resistance tested on Monday.
- The intraday downfall now seems to have found a decent support near 200-hour SMA.
- Mixed oscillators on hourly/daily charts warrant some caution for aggressive traders.
The USD/CAD pair extended the previous day’s rejection slide from the 1.2800 mark and witnessed some selling on Tuesday. The mentioned handle coincides with a short-term descending trend-line and should now act as a key pivotal point for short-term traders.
Meanwhile, the downfall lacked any follow-through selling and the USD/CAD pair, for now, seems to have formed a base near 200-hour SMA. Hence, it will be prudent to wait for a convincing break below the mentioned support before positioning for any further decline.
A fresh leg up in the US Treasury bond yields extended some support to the USD. This, along with the reluctant to place any aggressive bets ahead of the BoC decision on Wednesday, held investors from placing any directional bets and might help limit the downside.
Technical indicators on the daily chart – though have been recovering from the negative territory – are yet to confirm a bullish bias. Moreover, oscillators on the 4-hourly charts are holding in the neutral territory and further warrant caution for aggressive traders.
That said, sustained weakness below the 1.2725 region (200-hour SMA) might prompt some aggressive technical selling and turn the USD/CAD pair vulnerable to break below the 1.2700 mark. The downward trajectory could then drag the pair towards the 1.2665 support area.
On the flip side, immediate resistance is pegged near the 1.2760 region, above which bulls are likely to make a fresh attempt to conquer the 1.2800 mark. Some follow-through buying should pave the way for an extension of the recent recovery move from multi-year lows.
USD/CAD 1-hourly chart