- USD/CAD bounces off confluence support at 1.2855-1.2850, though no continuity.
- The resurgence in USD demand turns out to be a key factor acting as a tailwind for the pair.
- The rally in oil prices offers some support to the CAD and limits any significant rise in the pair.
The USD/CAD pair has managed to defend itself and attract some buying near the confluence support at 1.2855-1.2850. However, the rise has not continued and has been stopped before the 1.2900 level.
The US dollar was demanded again and spiked to a multi-day high, which in turn was seen as a key factor acting as a tailwind for the USD/CAD pair. However, the rally in crude oil prices underpinned the commodity-linked CAD and capped the pair’s rise.
From a technical point of view, the confluence support mentioned above comprises the 50-day SMA and the 50% Fibonacci retracement of the 1.2517-1.3223 move. Further down is the 1.2830-1.2820 zone and the 1.2800-1.2790 region, or the Fibonacci 61.8%.
This latest level should act as a key pivot point, which if broken would be seen as a new trigger for the bears and make the USD/CAD pair vulnerable. The move down could then accelerate towards the 1.2700 level towards the horizontal support at 1.2675-1.2665.
On the other hand, a push above the 1.2900 level is likely to face resistance near the previous day’s high around the 1.2935 region before the 38.2% Fibonacci around the 1.2960 area. Some continuation buying would suggest that the recent corrective pullback from the yearly high is over and pave the way for further gains. The USD/CAD pair could try to break above the psychological level of 1.3000 and retest the 1.3075-1.3085 zone, coinciding with the 23.6% Fibonacci.
USD/CAD daily chart
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USD/CAD key levels
Source: Fx Street
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