USD/CAD Price Analysis: Rallies to fresh one-month tops, further beyond mid-1.2800s
|- A combination of factors continued pushing USD/CAD higher for the third successive day.
- A broad-based USD strength, sliding oil prices remained supportive of the strong move up.
- The set-up supports prospects for a move towards retesting YTD tops, around mid-1.2900s.
The USD/CAD pair continued scaling higher through the mid-European session and climbed to fresh one-month tops, beyond mid-1.2800s in the last hour.
Against the backdrop of expectations for an imminent Fed taper announcement, a selloff in the global equity markets provided a strong boost to the safe-haven US dollar. Apart from this, a sharp decline in crude oil prices undermined the commodity-linked loonie and pushed the USD/CAD pair higher for the third successive day.
From a technical perspective, Friday's sustained breakthrough a one-week-old trading range was seen as a key trigger for bulls and prompted strong follow-through buying on the first day of a new week. A subsequent strength beyond the previous monthly swing highs and the 1.2800 mark has already set the stage for additional gains.
The constructive outlook is reinforced by the fact that technical indicators on the daily chart have been gaining positive traction and are still far from being in the overbought territory. That said, RSI on hourly charts is already flashing overbought conditions and warrants some caution before placing fresh bullish bets.
Nevertheless, the USD/CAD pair seems all set to climb further towards reclaiming the 1.2900 mark en-route YTD tops, around mid-1.2900s touched on August 20. Worries that Canada’s federal election could result in a deadlock might continue to act as a headwind for the domestic currency and adds credence to the bullish bias.
On the flip side, pullback below the 1.2830-25 region should find decent support near the 1.2800 mark. Any further decline below the 1.2765-60 area, should now be seen as a buying opportunity. This, in turn, should help limit the downside for the USD/CAD pair near the trading range resistance breakpoint, around the 1.2700 mark.
USD/CAD 4-hour chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.