- A combination of supportive factors helped USD/CAD regain positive traction on Monday.
- The drop in crude oil prices undermined the Canadian dollar and extended support amid modest USD strength.
- The technical set-up favors bullish traders and supports the prospects for additional short-term gains.
The pair USD/CAD It maintained its strong intraday gains during the early American session and was last seen trading around the 1.2610 region, close to a multi-week high reached on Friday.
Crude prices fell to the lowest level since March 17 and undermined the commodity-linked Canadian dollar. This, in turn, was seen as a key factor offering some support to the USD/CAD pair amid underlying bullish sentiment surrounding the US dollar. Despite the supportive factors, the bulls have, thus far, struggled to break above the very important 200-day SMA. Such a barrier has been capping the USD/CAD pair for the past three trading sessions and coincides with a descending trendline support breakout point.
The oscillators on the daily chart have just started to gain positive traction and prospects for support for an eventual breakout through the aforementioned confluence. The USD/CAD pair could rally to the mid-1.2600 level, or the Fibonacci 50% level of the decline from 1.2901-1.2403. Some further buying will suggest that the USD/CAD pair has formed a temporary bottom near 1.2400 and will pave the way for further gains. The momentum could push the price to the 1.2700 level en route to the 61.8% Fibonacci level, around the 1.2715 region.
On the other hand, the 1.2555 region now seems to protect the immediate drop ahead of the 23.6% Fibonacci level around the 1.2525 region. A convincing advance, leading to further weakness below the key psychological 1.2500 level, will turn the bias in favor of bearish traders. The USD/CAD pair would then turn vulnerable to drop and challenge the yearly low around 1.2400 with some intermediate support near the 1.2465 area.
USD/CAD daily chart
Technical levels
Source: Fx Street
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
