- USD/CAD spiked to a new yearly high on Monday, though it struggled to capitalize on the move.
- Last week’s break through a descending trend line supports prospects for further gains.
- Any significant pullback could still be seen as a buying opportunity and remain capped.
The pair USD/CAD gained positive traction for the third consecutive session and rose to a new yearly high around the 1.2950-1.2955 zone on the first day of a new week.
The drop in crude oil prices undermined the commodity-linked Canadian dollar and proved to be a key factor that acted as a tailwind for the USD/CAD pair. That said, the US dollar’s modest pullback from a two-decade high hit earlier this Monday capped gains and forced spot prices back around 30 pips from the daily high.
From a technical perspective, last week’s strong move higher helped the USD/CAD pair confirm a bullish breakout through a downward sloping trend line extending from December 2021. A subsequent move beyond the mark The price of 1.2900 validated the constructive outlook and supports the prospects for further appreciation movement in the short term.
Therefore, some follow-on strength, towards the recovery of the key psychological 1.3000 mark, remains a distinct possibility amid expectations of more aggressive policy tightening by the Fed. Momentum could extend further. and push the USD/CAD pair towards the next relevant resistance near the 1.3045-1.3050 region.
On the other hand, the 1.2910-1.2900 area now appears to protect the immediate drop ahead of the rising trend line resistance break point, currently mid-1.2800. Any further pullback could still be seen as a buying opportunity near the 1.2800 round figure, which should now act as a strong base for the USD/CAD pair.
A convincing break below would nullify the short-term bullish bias and trigger some technical selling. The USD/CAD pair could turn vulnerable to accelerate the decline towards the test of last week’s low around the 1.2715-1.2710 region.
USD/CAD daily chart
-637877008982092335.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.
