USD/CAD Price Analysis: Selling pressure builds around 1.2780 as bears look for a break below the 100 DMA

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  • The Canadian dollar is posting nice gains for the week of 0.85%.
  • A positive market sentiment fueled appetite for high beta currencies such as the CAD.
  • USD/CAD Price Forecast: Facing strong support around 1.2694-1.2700.

The USD/CAD declined in the North American session, extending its weekly losses for the third week in a row, as investors shrugged off a “hawkish” US Federal Reserve as core PCE rose to 4.9%, but was down from 5.1% yoy . At the time of writing, the USD/CAD is trading at 1.2727.

US equities remain positive, reflecting a risk-on environment. The S&P 500 is about to trim its May losses as the US Commerce Department reported that inflation rose at a slower pace than in March. Will the Fed slow the pace of rate hikes after reaching the 2% threshold?

Although inflation is heading lower, ING analysts noted that there are some factors lurking in the economic environment. First, the geopolitical backdrop continues to push up energy prices. Second, China’s zero-covid policy held back the improvement of supply chains, and third, the tight labor market must mitigate a wage price spiral.

Elsewhere, USD/CAD started trading near daily highs at 1.2784 on Friday, but dipped towards fresh three-week lows around the 1.2720 area.

USD/CAD Price Forecast: Technical Outlook

USD/CAD continues to have a bullish bias, although its two-week downtrend will face strong support at the 50 and 100-day moving averages (DMAs), around the 1.2704-1 area, 2693. However, USD/CAD bulls should be careful not to get too confident that the mentioned level will hold. Why? The Relative Strength Index (RSI) at 44.29 is pointing lower, well into bearish territory, and with plenty of room before reaching oversold conditions.

If the USD/CAD two-week downtrend continues, the first major support would be the 1.2693-1.2704 area. A break below would expose the 200 DMA at 1.2658, followed by the April 22 low at 1.2566. On the other hand, the first resistance of the USD/CAD would be 1.2800. Once broken, the next supply zone would be the 20 DMA at 1.2862, followed by the March 8 high at 1.2901.

Technical levels

USD/CAD

Panorama
Last Price Today 1.2722
Today’s Daily Change -0.0052
Today’s Daily Change % -0.41
Today’s Daily Opening 1.2774
Trends
20 Daily SMA 1.2871
50 Daily SMA 1.2704
100 Daily SMA 1.2696
200 Daily SMA 1.2663
levels
Previous Daily High 1.2849
Previous Daily Minimum 1.2769
Previous Maximum Weekly 1.2982
Previous Weekly Minimum 1.2776
Monthly Prior Maximum 1,288
Previous Monthly Minimum 1.2403
Daily Fibonacci 38.2% 1.2799
Daily Fibonacci 61.8% 1.2818
Daily Pivot Point S1 1.2745
Daily Pivot Point S2 1.2717
Daily Pivot Point S3 1.2665
Daily Pivot Point R1 1.2825
Daily Pivot Point R2 1.2877
Daily Pivot Point R3 1.2906

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Source: Fx Street

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