USD/CAD down to test 1.2760/50 support area

DXY weaker in early Europe.
BOC’s Poloz comments, Oil prices underpin CAD.
Canada’s manufacturing sales and US industrial figures eyed.

Dhwani Mehta FXStreet

The Canadian dollar is seen recovering ground against its American rival, now pushing the USD/CAD pair back towards the daily lows of 1.2752 reached in early Asian trades.

USD/CAD faces rejection near 20-DMA of 1.2785

After a brief phase of consolidation near 1.2780 levels, the spot came under renewed selling pressure, as oil prices are seen gaining momentum, offering fresh impetus to the resource-linked Loonie. The bid tone around both crude benchmarks gathers pace on expectations of tighter markets and pipeline outage in Britain.

Moreover, ongoing weakness seen in the US dollar across the board amid a lack of progress on the US tax reform bill and dovish FOMC policy decision, further keeps any recovery attempt in the spot short-lived. Meanwhile, the Canadian dollar also remains underpinned by the overnight hawkish remarks from the BOC Governor Steve Poloz, citing that he was 'increasingly confident' that the economy would need less monetary stimulus over time.

All eyes are now remain on the Canadian manufacturing sales report and the US industrial output data for fresh trading impetus both the CAD and USD.

USD/CAD Technical View

The immediate support for the pair aligns at 1.2761/52 (50-DMA/ daily low) ahead of 1.2700 (psychological level) and 1.2620 (Dec 5 low). On the upside, resistances could be seen at 1.2800 (psychological level), 1.2849 (200-DMA) and 1.2915 (Oct 31 high).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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