USD/CAD hits new weekly highs above 1.2750 on broad US dollar strength

USD/CAD is gaining ground in the session, up 0.45%, trading at 1.2739 at the time of writing. The market sentiment remains downbeat, as US stock indexes post losses caused by expiring options on Friday. The S&P 500 has broken below the 50-day moving average, risking the “buying the dip” narrative.

Additionally, oil prices that strongly correlate with the Canadian dollar are falling for the second straight day, with the WTI trading at $72.12, down 0.55%.

US Consumer Sentiment worse than expected

In the US economic docket, the University of Michigan Consumer Sentiment edged up to 71.0, still worse than the 72.2 expected by economists. The USD/CAD reaction to that headline was muted, while investors’ focus turned to next week’s Federal Open Market Committee meeting on September 21-22.

Meanwhile, in Canada, the Federal Election to take place on September 20 could spur some choppiness in the USD/CAD while the market awaits its results.

USD/CAD Price Forecast: Technical outlook

In the daily chart, the USD/CAD is trading at 1.2728. Even though the pair reached a weekly high, it unsuccessfully tested the September 8 high at 1.2762, retracing almost 40 pips afterwards. The first resistance on the upside would be the mentioned high at 1.2762. In case of a sustained break of that level, the following supply area, would be 1.2800.

On the flip side, failure at 1.2762 could pave the way for further losses. The first support would be 1.2700. In case of a break of that level, the USD/CAD could tumble to 1.2600.

The Relative Strength Index is at 58.34, aiming higher, supporting the uptrend, but macroeconomic developments should keep bulls cautious.

Technical levels to watch