USD/CAD: Rebound stalls above 1.3150 amid higher oil, bearish technicals
|- USD/CAD’s bounce appears to fizzle, as oil regains bid tone.
- Bearish SMA crossover on the hourly chart to weigh on the pair.
- Dollar licks wounds after the overnight slump, ahead of US data.
The quick rebound in the USD/CAD pair from two-day lows of 1.3135 appears to have lost steam over the last hour, as the fresh uptick in oil prices lend support to the Canadian dollar.
Meanwhile, the US dollar holds steady so far this Friday, consolidating the overnight sell-off triggered by the unimpressive initial jobless claims, which stoked concerns over the strength of the US economic recovery.
The US oil, WTI, is back on the bids, underpinned by the OPEC and its allies’ (OPEC+) commitment towards the output cuts policy. The alliance said on Thursday following their meeting that they will take action on members that are not complying with deep output cuts to support the market.
The fresh uptick in oil offers support to the resource-linked Loonie, capping the recovery attempts in the major. Attention now turns towards the US UoM Consumer Sentiment data and sentiment on Wall Street for fresh trading impetus.
From a short-term technical perspective, the likely bearish crossover on the hourly chart seems to be weighing on the pullback. The 21-hourly Simple Moving Average is on the verge of piercing the 50-HMA from above.
Meanwhile, the hourly Relative Strength Index (RSI) points south while trending in the bearish territory below 50.0. The technical indicator allows for fresh weakness in the near-term.
Also, its worth noting that the major trades below all majors HMAs. Therefore, a test of the daily lows at 1.3135 cannot be ruled. On the flip side, a decisive break above the critical resistance at 1.3185, the confluence of 21 and 50-HMAs, is needed to negate the bearish momentum.
USD/CAD: Hourly chart
USD/CAD: Additional levels
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