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  • USD/CAD price pares off gains, retraces to mid-1.2600.
  • Bank of Canada retains the monetary policy, remains dependent on the key economic data.
  • Crude oil prices stay firm, keeping the Canadian dollar supported.

The USD/CAD price analysis suggests bearish price action as the price has been reaching key levels after US unemployment claims figures.

The USD/CAD pair has completed the last two trading days in positive territory, reaching a two-week high of 1.2763 on Wednesday. Thursday’s price action was fairly tight; the pair traded around 1.2650.

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The Bank of Canada (BoC) kept monetary policy the same on Wednesday, as expected. According to the Bank of Canada policymakers, if the rebound continues for the next seven weeks, the bank will likely slow the pace of quantitative easing at the end of October. However, data dependencies are a major obstacle.”

Weak performance from major Wall Street indices helped the dollar reach the status of a safe haven, as the US dollar index (DXY) rose for a third consecutive day on Wednesday. The DXY is consolidating its daily gain after the US weekly unemployment claims data, most recently falling 0.15% to 92.56 on the day.

On the same day, President Williams and Governor Bowman will also speak.

In contrast, the rise in crude oil prices amid falling production in the Gulf of Mexico is helping commodity-linked Canadians remain competitive. WTI crude oil, which rose 1.5% on Wednesday, is now up 0.5% at $79.70.

USD/CAD price technical analysis: 20/50 SMA congestion to limit losses

The USD/CAD price falls back to 20-period simple moving average on the 4-hour chart. The last three down bars consistently closed near the lows while the volume was on the rise. The congestion of 20-period and 50-period SMAs may provide some support around the 1.2640 area. However, further losses may lead to 1.2600 where 200-period SMA resides. The average daily range is 92.5% so far during the New York session which indicates that the price has almost done its action for the day.

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On the upside, 1.2707 (swing high of Aug 27) may provide some resistance ahead of 1.2763 (monthly high). However, the path of least resistance lies on the downside.

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