• USD/CAD probes five-day uptrend, retreats from 28-month top.
  • Risk-aversion underpinned US dollar, drowned oil prices amid fears of aggressive central bank actions, recession.
  • US Durable Goods Orders, CB Consumer Confidence will be necessary for immediate directions.
  • Rush to risk safety can keep USD/CAD buyers hopeful even if the US data disappoints.

USD/CAD bulls take a breather around 1.3730 during Tuesday‘s Asian session after a five-day uptrend to refresh the yearly top. That said, the Loonie pair’s latest weakness could be linked to a halt by the oil bears, Canada’s essential export item, and the market’s wait for the critical US data.

US Dollar Index (DXY) jumped to a fresh 20-year high the previous day as traders sought safety against the risks emanating from the GBP/USD’s slump to the all-time low. Also keeping the US dollar firmer were the upbeat Treasury yields and the signals that many central banks will be forced to defend their currencies against the greenback.

The risk-off mood joined the firmer US dollar to weigh on the WTI crude oil that dropped 3.70% to poke the yearly low near $76.00, around 76.60 by the press time. Additionally, chatters that Germany will manage energy reserves to make it through this winter, even amid the Russia-Ukraine crisis, kept the black gold pressured.

Furthermore, downbeat US data and hawkish Fedspeak propelled the USD/CAD prices. Chicago Fed National Activity Index weakened to 0.0 in August versus 0.09 market expectations and an upwardly revised prior reading of 0.29. Even so, Boston Fed President Susan Collins said, per Reuters, “Getting inflation down will require slower employment growth, somewhat higher unemployment rate”. Following that, Cleveland Fed President Loretta Mester said on Monday that if there is an error to be made, better that the Fed do too much than to do too little.

Amid these plays, the yields rallied as the traders sought premium to hold riskier assets while the equities dropped, which in turn helped the US dollar to remain firmer.

Looking forward, the USD/CAD bulls are likely to keep reins despite the latest pullback. However, the US CB Consumer Confidence for September and Durable Goods Orders for August will be crucial to watch for intraday guidance.

Also read: US Consumer Confidence Preview: Near-term relief or more risk aversion?

Technical analysis

A broad resistance area established between April and May 2020, around 1.3830 and 1.3850, challenges USD/CAD buyers amid overbought RSI conditions. The anticipated pullback, however, needs validation from June 2020 top near 1.3715.

Additional important levels

Overview
Today last price 1.3731
Today Daily Change 0.0137
Today Daily Change % 1.01%
Today daily open 1.3594
 
Trends
Daily SMA20 1.3202
Daily SMA50 1.3014
Daily SMA100 1.2939
Daily SMA200 1.2811
 
Levels
Previous Daily High 1.3613
Previous Daily Low 1.3468
Previous Weekly High 1.3613
Previous Weekly Low 1.3227
Previous Monthly High 1.3141
Previous Monthly Low 1.2728
Daily Fibonacci 38.2% 1.3557
Daily Fibonacci 61.8% 1.3523
Daily Pivot Point S1 1.3504
Daily Pivot Point S2 1.3414
Daily Pivot Point S3 1.3359
Daily Pivot Point R1 1.3648
Daily Pivot Point R2 1.3703
Daily Pivot Point R3 1.3793

 

 

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