- USD/CAD fell to a two-week low on Monday amid a strong dollar selling bias.
- The modest pullback in oil prices undermined the loonie and helped limit the slide.
- Recovery beyond 1.2800 could face resistance near the 38.2% Fibonacci.
On Monday, the pair USD/CAD came under renewed selling pressure and fell to a two-week low around the 1.2770 area amid widespread US dollar weakness. However, a modest intraday pullback in oil prices weakened the commodity-linked loonie and helped limit further losses, at least for now.
The USD/CAD pair was last seen trading a few pips below 1.2800, down almost 0.40% on the day, and remains at the mercy of the dollar’s price dynamics.
From a technical point of view, the bulls have managed to defend the 50% Fibonacci level from the strong rally of 1.2459-1.3077. Such support should now act as a pivot point which, if broken decisively, will set the stage for an extension of the recent sharp pullback from the highest level since November 2020.
The USD/CAD pair could then accelerate to a test of intermediate support near the 1.2720-1.2715 region before finally falling below 1.2700, or the 61.8% Fibonacci level. The latter coincides with the 100-day SMA and is followed by the all-important 200-day SMA, around the 1.2660-1.2665 area.
Follow-up selling would suggest that the USD/CAD has topped out in the short term and trigger further technical selling. The subsequent decline could drag the price towards the 1.2600 level towards the next relevant support near the 1.2560 horizontal zone.
On the other hand, the attempted recovery above 1.2800 could face stiff resistance near the 38.2% Fibonacci level, around the 1.2835-1.2840 area. Sustained strength beyond that could trigger a short-covering bounce and allow the bulls to reclaim the 1.2900 level, though any further positive moves look elusive.
USD/CAD daily chart
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Technical levels
Source: Fx Street
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