- USD / CAD posted a solid intraday bounce from around 1.2700.
- Resurgent USD demand, a pullback in oil prices triggered some short hedging moves.
- The mixed media setup warrants some caution for aggressive bull traders.
The pair USD / CAD it caught some aggressive offers during the early North American session and jumped to new daily highs, around 1.2685 in the last hour.
A sudden spike in demand for US dollars, supported by continued increases in US Treasury yields, was seen as a key factor lending some support to the USD / CAD pair. Aside from this, a modest decline in crude oil prices undercut the loonie and continued to support the strong intraday rebound from around 1.2600, or multi-week lows hit earlier this Tuesday.
From a technical perspective, the sustained strength above the 23.6% Fibonacci level of the recent bearish move of 1.2763-1.2610 was considered a key trigger for intraday bullish traders. Some follow-up buying past the 50 hourly SMA and the 38.2% retracement of the Fibonacci level. The level could have set the stage for additional gains. Therefore, a further move towards the 50% Fibonaaci level, around 1.2700, seems like a clear possibility.
Meanwhile, the technical indicators on the 1-hour chart have been gaining positive traction, but have yet to confirm a bullish bias on the 4-hour / day charts. This, in turn, justifies some caution for bullish traders and before positioning for any short-term appreciation moves.
On the other hand, the 23.6% Fibonacci level around the 1.2645 region now seems to protect the immediate drop. A convincing break below will negate any positive intraday outlook and make USD / CAD vulnerable. The 1.2610 area (daily swing lows) will be the next relevant downside target before multi-year lows, around the 1.2590 region touched on January 21.
1 hour chart
Technical Levels
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