- After the previous session’s slide to 8-1/2 month lows, the USD/CAD pair staged a modest recovery on Friday and is currently placed at the top end of its daily trading range.
- The pair on Thursday did break below Nov. 2018 lows support – around mid-1.3000s but showed some resilience below 38.2% Fibo. level of the Dec. 2017-Jan. 2019 bullish move.
- The mentioned swing low, around the 1.3040-35 region now becomes a key pivotal point and might play a key role in determining the pair’s next leg of a directional move.
A modest pullback in Crude Oil prices, which tend to undermine demand for the commodity-linked currency – Loonie, coupled with a goodish pickup in the USD demand – supported by an intraday turnaround in the US Treasury bond yields helped gain some positive traction.
Moreover, given the recent slide of nearly 400-pips over the past three weeks or so, slightly oversold conditions also seemed to have prompted some short-covering bounce ahead of Friday’s important releases of the US and Canadian monthly employment details.
A sustained recovery beyond the 1.3100 handle will suggest that the pair might have already formed a near-term bottom and set the stage for an extension of the recovery move further towards weekly swing high – around the 1.3145 level, en-route the 1.3180-90 supply zone.
On the flip side, a follow-through selling below the 1.3040-35 region now seems to turn the pair vulnerable to accelerate the slide towards challenging the key 1.30 psychological mark before the bearish momentum gets extended further towards the 1.2970-65 support area.
USD/CAD daily chart