- USD/CAD turned positive for the fifth day in a row and soared to a nearly one-month high.
- The technical setup favors bullish traders and supports prospects for further gains.
- Any significant pullback below the 1.2865 area would be seen as a buying opportunity.
The pair USD/CAD attracted some buying near the 1.2865 area, the 61.8% Fibonacci level of the 1.3077-1.2518 decline, and turned positive for the fifth day in a row on Tuesday. The momentum carried price to a one-month high, closer to 1.2950 during the early American session.
The US dollar reversed modest intraday losses and moved back close to near two-decade highs hit the previous day. This was seen as a key factor that acted as a tailwind for the USD/CAD pair. Bulls were not affected by the further rise in crude oil prices, which tend to support the commodity-linked loonie.
The emergence of fresh buying near the breakout point of previous resistance has turned into support, and some follow through strength beyond 1.2900 favors bullish traders. As the oscillators on the daily chart have been gaining positive traction, the USD/CAD pair looks poised to prolong a week-long appreciation move.
Spot prices could aim to clear an intermediate hurdle near the 1.2980 area and reclaim the key psychological mark of 1.3000. The bullish trajectory could extend further and allow the USD/CAD pair to challenge the yearly high, around the 1.3075 region touched on May 12, although pre-Fed anxiety could cap the rally.
On the other hand, the 1.2870-65 area now becomes strong immediate support to defend. Any further pullback could find good support near the 1.2820 horizontal zone. This zone is closely followed by 1.2800, which coincides with the 50% Fibonacci level and should now act as a strong base for the USD/CAD pair.
A convincing break below could see the pair weaken further below the 1.2760 support area and drop to the 38.2% Fibonacci level around the 1.2730 area. A follow up sell, leading to a subsequent break of 1.2700, would negate the short-term positive trend and shift the bias in favor of bearish traders.
USD/CAD daily chart
-637908111624293884.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.
