USDCAD flirts with the 100-day SMA below 1.3250 ahead of Canadian CPI and US Retail Sales.

• USDCAD is again approaching a nearly two-month low amid renewed selling bias around the dollar.
• A positive risk tone and expectations for less aggressive Fed rate hikes weigh on the dollar.
• An intraday rally in oil prices benefits the CAD and also puts pressure on the pair
• Now traders await the Canadian CPI report and US retail sales data.

The USDCAD is struggling to take advantage of its modest intraday rise just above the 1.3300 level and is moving lower for the second day in a row on Wednesday. The pair remains under pressure during the first half of the European session and is currently flirting with the support at the 100-day SMA, around the 1.3230 zonea nearly two-month low hit Tuesday.

A good one global risk sentiment recovery triggers further selling around the safe-haven US dollar, which in turn is seen as a key factor putting downward pressure on the USDCAD. Investors turned bullish after early findings suggested that the missile that hit Poland on Tuesday could have been fired by Ukraine at a Russian missile. This, along with strong expectations that the Federal Reserve will ease its hawkish stance, continues to weigh on the dollar.

Apart of this, an intraday bounce in crude oil prices benefits the CAD, the commodity currency, and also contributes to the selling tone surrounding the USDCAD pair. Having said that, concern about lower fuel consumption in Chinaamid rising COVID-19 cases, could act as a headwind for black gold. This could help limit losses for the USDCAD pair ahead of the release of the latest Canadian consumer inflation figures and US monthly retail sales data due later in the American session.

Even from a technical perspective, The USDCAD pair has, so far, been showing some resistance near the 100-day SMA. This makes it prudent to wait for sales below the lows around 1.3225 before positioning for further losses. That being said, the head-shoulder pattern that formed between September and November has yet to break even to its conservative target at 1.3205and it is still far from reaching the final goal around 1.3020so this suggests the possibility of more falls.

In the meantime, any recovery attempt could be hit by a hurdle around the 1.3300 level and remain limited near the 1.3335 zone. This last level should act as a tipping point, which if broken could trigger a short-term rally.

USDCAD technical levels