- The US dollar recovers during the American session, the DXY continues to decline strongly.
- The Canadian dollar is among the weakest currencies on Tuesday despite rising crude prices.
- USD/CAD finds support above 1.2800.
The USD/CAD bounced higher and pulled back from losses on Tuesday, after the dollar gained momentum during the American session. The pair posted a new daily high at 1.2854 and is hovering around 1.2845. On Tuesday it bottomed at 1.2805, the lowest level since May 5th.
The US dollar fell sharply amid risk appetite. Over the past few hours, the USD clawed back after US yields turned higher and US stocks trimmed gains. US 10-year Treasury yields rose from 2.90% to 2.97% and the 30-year yield from 3.11% to 3.16%. The Dow Jones is up 0.55%, or 165 points, and down 200 points from the high.
US economic data beat expectations. Retail sales rose 0.9% in April, vs. 0.7% market consensus (March figures revised higher). Industrial production advanced 1.1%, above the 0.5% expected by analysts. The figures helped the dollar.
The loonie also fell against the Australian and New Zealand dollars, despite the rise in crude oil prices. The broad market correction boosted NZD/CAD and AUD/CAD.
Bounce from the 20-day SMA
USD/CAD’s decline from the highest level in over a year found support above the 1.2800 area. The rebound brought the price back above the 20-day SMA at 1.2835. A daily close below the line could open the doors to a retest of 1.2800. The next support lies at 1.2770 and 1.2720.
If USD/CAD sustains above the 20-day SMA, attention will turn to the next resistance at 1.2855, followed by 1.2870 and 1.2905.
Technical levels
Source: Fx Street
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