- USD/CAD managed to hold above the 1.3000 mark during the first half of the European session.
- Oil prices weighed on the loonie, although a consolidating move in the dollar price limited gains.
- Investors also seemed reluctant to make aggressive bets ahead of the key FOMC meeting minutes.
The pair USD/CAD struggled to break above the strong horizontal barrier of 1.3075-1.3085 and finally settled within more than 50 pips of its highest level since November 2020 hit on Tuesday. However, the subsequent pullback stalled near the psychological 1.3000 level on Wednesday, which should now act as a sweet spot for intraday traders.
Against the backdrop of growing fears of a global recession, further COVID-19 lockdowns in China could cripple the recovery in fuel demand. This, in turn, did not help oil prices make a significant recovery from more than two-month lows, which continued to undermine the commodity-linked loonie and acted as a tailwind for the USD/CAD pair. .
On the other hand, the US dollar consolidated its recent gains and reached a new two-decade high, reached on Tuesday. Traders seemed reluctant to make aggressive bets, preferring to wait cautiously before the FOMC meeting minutes, due later in the US session. This, in turn, limited the rise of the USD/CAD pair, at least for now.
From a technical point of view, the 1.3075-1.3085 area could continue to act as a strong immediate barrier ahead of 1.3100, which if breached would look like a new trigger for the bulls. This would allow the USD/CAD pair to continue rising towards the intermediate hurdle of 1.3155-1.3160, en route to 1.3200 and the 1.3270 resistance zone.
On the other hand, the 1.3010-1.3000 zone could continue to protect the immediate downside. Some follow-up selling could drag spot prices towards the 1.2945-1.2940 area. Any further decline could be seen as a buying opportunity and remain capped near 1.2900 which should act as a strong base for the USD/CAD pair.
USD/CAD daily chart
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Technical levels
Source: Fx Street
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