- USD / CAD faced rejection near the 200-day SMA and was down on Wednesday.
- The setup still favors the bulls and supports the prospects for a breakout to the upside.
- Sustained weakness below 1.2500 is needed to negate the positive outlook.
The pair USD / CAD it continued its struggle to find acceptance / build on momentum beyond 1.2600 and faced rejection near the very important 200-day SMA on Wednesday. The pair fell to fresh daily lows, around the 1.2560 region and has now reversed some of the positive movement from the previous day.
A modest spike in crude oil prices sustained the Canadian dollar pegged to commodities and turned out to be one of the key factors acting as a headwind for the USD / CAD pair. That being said, the renewed buying interest around the US dollar should help limit any significant pullbacks for the pair, at least for now.
The risk-off environment continued to benefit the safe-haven dollar, which was further supported by a good recovery in US Treasury yields. Apart from this, traders may also be reluctant to place aggressive bets earlier. of the Canadian CPI report and the FOMC’s monetary policy decision.
Looking at the technical picture, the USD / CAD pair has been swinging in a range for the last week or so. The upper limit of the trading band coincides with the 200-day SMA and should act as a key point for short-term traders. A sustained force beyond will set the stage for additional gains.
Meanwhile, the technical indicators on the daily chart, although they have corrected from higher levels, are still comfortably in bullish territory. This, in turn, supports the prospects for some buying to emerge on the lower dips. Therefore, any subsequent drop could be considered a buying opportunity.
From current levels, the horizontal zone of 1.2525 should protect the immediate low before the key psychological level of 1.2500. A convincing break below could turn the bias in favor of bearish traders. The USD / CAD pair could become vulnerable and accelerate the slide towards the next relevant support near the 1.2435 region.
On the other hand, some subsequent purchases beyond the 1.2600 mark will be seen as a new trigger for the bulls and will lift the USD / CAD pair towards the intermediate hurdle of 1.2665-70. Momentum could extend further towards 1.2700 before the bulls eventually push the pair to the 1.2770-75 resistance zone.
4 hour 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.
