Intraday market analysis: US Dollar Index continues to soften

USD/CAD tests key support

The Canadian dollar inched lower after the BOC left its interest rate unchanged as expected. The pair has met stiff selling pressure at the supply zone around 1.2850, a triple top on the daily chart.

A drop below 1.2720 has forced out short-term buyers. 1.2580 is the next support and it sits on the 30-day moving average. A bearish breakout would deepen the correction to the psychological level of 1.2500.

On the upside, the bulls will need to clear 1.2770 before they could have another attempt at the supply zone.

USOIL rebounds from demand zone

WTI crude bounces back on signs that the new virus strain has a limited impact on demand.

Price action met strong buying interest near last August’s lows at 62.00, major support from the daily chart to keep the uptrend intact. A bullish RSI divergence in this congestion area indicates a loss of momentum in the bearish drive.

Then a rally above 69.30 forced the sellers to exit, opening the door for an extension towards 79.00. The initial surge has pushed the RSI into the overbought territory. 68.00 is immediate support.

GER 40 to test major resistance

The Dax 40 recoups losses as fears of the omicron variant start to subside.

Last October’s lows near 14900 have proven to be solid support. The rally above 15520 stirred up volatility as the last sellers rushed to the exit. The bulls are pushing towards 15920, where the index took a nosedive in late November.

A bullish breakout could attract more buying interest and turn market sentiment around. Meanwhile, an overbought RSI has caused a pullback, giving time for the bulls to accumulate. 15300 is the closest support.