USD/CAD Price Analysis: Clings to recovery gains, remains below mid-1.2300s
|- USD/CAD staged a modest recovery from multi-month lows touched earlier this Thursday.
- The risk-off impulse, elevated US bond yields provided a goodish lift to the safe-haven USD.
- Retreating crude oil prices undermined the loonie and remained supportive of the momentum.
The USD/CAD pair showed some resilience below the 1.2300 round-figure mark and stage a goodish intraday bounce from four-month lows touched earlier this Thursday. The pair held on to its modest recovery gains through the mid-European session and was last seen hovering near daily tops, just below mid-1.2300s.
The risk-off impulse in the markets helped revive demand for the safe-haven US dollar, which further benefitted from elevated US Treasury bond yields. Apart from this, a modest pullback in crude oil prices from multi-year tops weighed on the commodity-linked loonie and triggered a short-covering around the USD/CAD pair.
From a technical perspective, oversold RSI (14) on the daily chart prompted bearish traders to take some profits off the table near the lower boundary of a short-term descending channel. The mentioned support, around the 1.2290-85 area, should act as a pivotal point for traders and help determine the near-term trajectory.
A convincing break below will mark a fresh bearish breakdown and turn the USD/CAD pair vulnerable to prolong its bearish trend witnessed over the past one month or so. The subsequent slide could get extended towards the next relevant support near mid-1.2300s before the pair eventually drops to the 1.2300 round-figure mark.
On the flip side, any further recovery is likely to confront resistance near the 1.2375-80 region ahead of the 1.2400 mark. Some follow-through buying should pave the way towards a confluence hurdle near the key 1.2500 psychological mark, comprising of the very important 200-day SMA and the top end of the mentioned channel.
USD/CAD daily chart
Technical levels to watch
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