- USD/CAD pulls back from monthly high and flirts with short-term support line.
- The RSI is overbought and the MACD is about to make a bearish cross, causing sellers to appear.
- The weekly uptrend line and horizontal support from early May limit immediate moves.
- Buyers have a tough road ahead of the yearly high set in May.
USD/CAD loses bullish momentum at monthly high, pulling back towards 1.2950 at the start of the European session on Wednesday.
The pair’s pullback could be linked to overbought conditions on the RSI as well as an impending bearish cross on the MACD. That said, the pullback remains elusive until the pair breaks the weekly support line around 1.2950 at time of writing.
Still, a horizontal zone comprising multiple levels marked from May 2 around 1.2920-15 will challenge USD/CAD sellers.
Also, 61.8% see Fibonacci retracement of May 12-June 8 dip near 1.2860 will precede confluence of 1.2795 support including 200 SMA and Fibonacci 50% to limit continuation of the fall of the pair.
On the other hand, recovery moves could initially be challenged by the mid-May high near 1.2980 before targeting the 1.3000 level as a key hurdle.
Should USD/CAD prices break above 1.3000, multiple resistances around 1.3040-50, followed by May’s high of 1.3076, could call the upside momentum into question.
Overall, USD/CAD is likely to pull back, but the downside seems limited.
USD/CAD 4 hour chart
USD/CAD additional technical levels
Source: Fx Street
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