- USD/CAD staged an intraday rebound from a fresh multi-week low hit earlier this Thursday.
- Geopolitical risks continued to benefit the safe haven USD and acted as a tailwind for the pair.
- The modest pullback in oil prices undermined the loonie and extended further support to the pair.
The pair USD/CAD reversed a drop from early European trading to levels below 1.2600, or the lowest level since Jan 26, and was last seen trading almost flat on the day.
Crude oil prices witnessed a modest pullback from a multi-year high amid reports that the next round of peace talks between Russia and Ukraine are underway. This, in turn, undermined the commodity-linked Canadian dollar and extended some support to the USD/CAD pair.
On the other hand, concerns about the economic impact of rising commodity prices following Russia’s invasion of Ukraine continued to underpin the US dollar as a safe haven. This was seen as another factor that helped the USD/CAD pair attract some buying near the 1.2585 area.
From a technical perspective, the overnight post-BoC drop below 1.2650 horizontal support and February’s monthly low around the 1.2635 region favors bearish traders. Therefore, any significant rally could be seen as a selling opportunity and risk fading quickly.
The negative outlook is reinforced by the fact that the technical indicators on the daily chart have just started to fall into bearish territory and are still far from being in the oversold zone. This warrants some caution before confirming that the USD/CAD pair has bottomed out.
Meanwhile, any further upside moves are more likely to face immediate resistance near the 1.2650 support break point. The next relevant hurdle is tied near the 1.2685 region ahead of the 1.2700 level, which if broken decisively could nullify the short-term bearish outlook.
On the other hand, weakness below the 1.2600 mark would make the USD/CAD pair vulnerable to test the very important 200-day SMA around 1.2550. The downward trajectory could extend further and drag prices of the pair further towards the psychological 1.2500 level.
USD/CAD daily chart
Additional 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.
