USD/CAD Price Analysis: Faces rejection near 1.3000 mark, bullish potential intact
|- USD/CAD eases from a one-month high following the release of upbeat Canadian Retail Sales.
- Weaker crude oil prices could undermine the loonie and offer support amid a stronger greenback.
- The technical set-up favours bullish traders and supports prospects for further near-term gains.
The USD/CAD pair climbs to a one-month high during the early North American session, albeit struggles to capitalize on the move beyond the 1.3000 psychological mark. The pair trims a part of its intraday gains and is currently placed around the 1.2980-1.2975 region, still up over 0.20% for the day.
The upbeat Canadian Retail Sales figures for June offers some support to the domestic currency and act as a headwind for spot prices. That said, a weaker tone around crude oil prices should keep a lid on any meaningful upside for the commodity-linked loonie. Apart from this, the ongoing US dollar rally to its highest level since mid-July favours bullish traders and supports prospects for a further appreciating move for the USD/CAD pair.
From a technical perspective, the overnight move beyond the 1.2980-1.2985 hurdle, which coincides with the 50% Fibonacci retracement level of the July-August downfall, adds credence to the positive outlook. Furthermore, oscillators on the daily chart have just started moving into bullish territory. This, in turn, suggests that the path of least resistance for the USD/CAD pair is to the upside and dips are likely to get bought into.
Traders, however, might now wait for sustained strength beyond the 1.3000 mark before placing fresh bullish bets. The USD/CAD pair could then climb to the 61.8% Fibo. level, around the 1.3035 zone and extend the momentum further towards the next relevant hurdle near the 1.3080 area. Some follow-through buying, leading to a subsequent move above the 1.3100 mark, would mark a fresh breakout and pave the way for additional gains.
On the flip side, the 1.2930-1.2920 resistance breakpoint (38.2% Fibo. level) now seems to protect the immediate downside ahead of the 1.2900 round-figure mark. Any further decline is more likely to find decent support and remain limited near the 23.6% Fibo. level, around the 1.2845-1.2840 region. Failure to defend the said support level would negate any near-term positive bias and turn the USD/CAD pair vulnerable to slide further.
The downward trajectory could then drag spot prices to the 1.2800 round-figure mark en route to the very important 200 DMA support, currently near the 1.2755 region. This is followed by the monthly low, around the 1.2730-1.2725 region, which should act as a pivotal point. A convincing break below would be seen as a fresh trigger for bears.
USD/CAD daily chart
Key levels to watch
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