- USD/CAD witnessed fresh selling on Wednesday and fell to its lowest level since April 21st.
- Rising oil prices underpinned the loonie and acted as a headwind amid a modest dollar pullback.
- Sustained weakness below 1.2500 would pave the way for further short-term losses.
The pair USD/CAD struggled to hold on to its modest intraday recovery gains and was met with a fresh bid near the 1.2560 area on Wednesday. The intraday drop dragged spot prices to the lowest level since April 21, around the 1.2520 area during the early American session.
Despite rising US Treasury yields and caution, the safe-haven US dollar was unable to capitalize on its early advance amid a nice rebound in demand for the shared currency. Elsewhere, rising crude oil prices have supported the commodity-linked dollar and put some downward pressure on the USD/CAD pair.
From a technical point of view, last week’s sustained break below the important 200-day SMA was seen as a further trigger for bearish traders. Furthermore, the inability of the USD/CAD pair to gain significant traction and the appearance of fresh selling at higher levels support the prospects for an extension of the nearly month long downtrend.
Further selling below the key psychological 1.2500 level will reaffirm the negative bias and drag the USD/CAD pair to the next relevant support near the 1.2450 area. The bearish trajectory could extend further and allow the bears to challenge the low of the year around 1.2400 hit on April 5th.
On the other hand, the 1.2560 area, or the daily high, seems to have become an immediate hurdle. Any further move higher could be seen as a selling opportunity near 1.2600. This, in turn, should limit the USD/CAD pair’s upside near the 200 DMA support breakout point, currently at the 1.2660 zone.
USD/CAD daily chart
-637902937299939190.png)
Technical levels
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
