- USD/CAD falls back below 1.2600, following a pullback in the US dollar.
- The oil price rebound benefits the CAD and also weighs on the pair.
- USD/CAD turns down towards the 21-day SMA after rejection above the 200-day SMA.
USD/CAD remains in lower ground at the start of the European session on Wednesday, below the 1.2600 level, affected by a renewed decline in the US dollar against major currencies.
The dollar pullback from two-year highs could be mainly attributed to a sharp correction in the USD/JPY pair after facing rejection just below the psychological barrier of 129.50.
Meanwhile, the rebound in the price of WTI, supported by lower US inventories and OPEC+ production levels, has benefited the CAD and has also weighed on the pair.
Attention now remains on Canadian CPI and Fed Beige Book data to indicate the pair’s direction.
Technically, USD/CAD is turning lower towards the horizontal 21-day moving average support at 1.2554 after failing to find acceptance above the 200-day SMA earlier. The 200-day SMA is currently at 1.2628.
The 14-day RSI is turning lower, moving further below the mid-line, which points to further declines in the pair.
A sustained move below the 21-day SMA could expose the 14 Apr lows of 1.2521, below which the round 1.2500 level could be tested.
USD/CAD daily chart
Only a daily close above the 200 DMA will help to initiate a fresh advance to challenge the 50 DMA at 1.2652.
Further up, the 100-Day SMA at 1.2681 could come into play if the recovery momentum gains strength.
USD/CAD additional levels
Source: Fx Street
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