USD/CAD Price Turns Neutral at 1.2450, Bulls Looking for Catalyst

• USD/CAD price remains in a narrow range in today’s Asian session.
• Fed’s cautious forecast keeps the dollar bulls limited.
• Upbeat US NFP report helped the Greenback to contain losses and rally.

While the USD/CAD price remains contained in a narrow trading channel during the Asian session, it was recently hovering in the neutral territory near the mid-1.2400 zone.

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The USD/CAD pair did not experience any significant movement on the first day of the new week due to a combination of factors. First, after a positive rebound from monthly lows, crude oil prices rose on Friday for the second day in a row. So, the loonie remained tied to the commodity prices and acted as a headwind for the majors.

In contrast, the Fed’s cautious forecast caused the bulls of the US dollar to be defensive and cooperate to contain significant upside for the USD/CAD pair. Last Wednesday, the US Federal Reserve held on to its temporary inflation, and Fed Chairman Jerome Powell reiterated that politicians are not in a hurry to hike interest rates.

A positive US employment report, along with weaker growth and a solid rise in Treasury bond yields, helped limit the safe-haven dollar’s losses. Thus, bearish traders need to be cautious and position themselves in case of a significant corrective slide out of the 1.2480 area or around Friday’s monthly highs.

The dollar is left at the mercy of US bond yields and the broader risk sentiment of the market on Monday, with no major economic data expected to be released. In addition, the momentum in oil prices may give the USD/CAD pair some support. Further guidance will come from comments made by Fed Chairman Jerome Powell during the US session.

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USD/CAD technical analysis: Bulls not tired yet

The USD/CAD price is wobbling above the 20-period SMA on the 4-hour chart. The upside remains capped by the 200-period SMA around 1.2465 area. However, the volume is drying up with a downside correction. It looks like a preparation for an up move after the minor correction. The average daily range is around 29% until now, which is normal for the pair. Any downside correction may find support at 1.2440 (20-period SMA) ahead of 1.2410 (50-period SMA).

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