- A combination of factors did not help the USD / CAD to preserve its initial gains in the 1.2565-70 area.
- Falling US bond yields weighed on the USD; a modest rebound in oil prices sustained the loonie.
- Sustained weakness below 1.2500 is needed to confirm a further bearish breakout.
The pair USD / CAD It struggled to capitalize on its initial positive move and is now down around 30 pips from the daily highs near the 1.2565-70 region. The pair was last seen trading around the 1.2535 zone, rising just 0.10% on the day.
The continued decline in US Treasury yields did not help the US dollar preserve its intraday gains led by Fed Chairman Jerome Powell’s upbeat comments on the US economy. Apart from this, a modest rally in crude oil prices further sustained the Canadian dollar pegged to commodities and sparked some selling around the USD / CAD pair.
Looking at the technical picture, the USD / CAD has been trending down along a downward sloping channel for the last four months or so. The upper limit of the mentioned channel coincides with the supply zone 1.2625-30. Repeated failures near the mentioned barrier add credibility to a well-established short-term downtrend.
Despite the negative setup, the USD / CAD pair, so far, has managed to hold its neck above the key psychological level of 1.2500. This represents the 50% Fibonacci level of the recent 1.2365-1.2647 rally from multi-year lows, which should now act as a key point for traders and help determine the next stage of a directional move.
Meanwhile, the technical indicators on the daily chart have yet to fully recover from the negative territory. Additionally, the oscillators on the hourly charts have started to move back into bearish territory, supporting the prospects for further losses. With that said, bearish traders could still experience sustained weakness below 1.2500.
Some follow-up sales below 61.8% Fibonacci. level, around the 1.2480-75 region will reaffirm the bearish outlook and make the USD / CAD vulnerable to lower further towards 1.2400. The downward trajectory could extend further and allow bearish traders to target to challenge multi-year lows, around the 1.2365 region.
Daily chart
Technical levels
.
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.
