USD/CAD hovers around 1.2450 despite broad US dollar strength across the board

The USD/CAD pair slides during the New York session is trading at 1.2462, down 0.18% at the time of writing. 

The market sentiment is downbeat, portrayed by US stock indices posting losses between 0.25% and 0.34%. Factors like the energy crunch in Europe and Asia, the Chinese Evergrande’s real-estate spillover in the sector, inflationary pressures, and rising energy prices have kept investors at bay.

That said, rising oil prices are boosting the Canadian dollar. Western Texas Intermediate (WTI) crude oil is barely unchanged at $79.90, below the $80.00 threshold for the first time in two days. 

Meanwhile, the US Dollar Index that measures the greenback’s performance against a basket of six peers is advancing 0.12%, currently at 94.48, whereas the US T-bond 10-year benchmark note rate is declining three basis points (bps), down to 1.566%, for the first time since the last week.

USD/CAD Price Forecast: Technical outlook

Daily chart

The USD/CAD is trading below the daily moving averages (DMA’s), suggesting the pair is in a downtrend. Momentum indicators, like the Relative Strength Index (RSI) at 36, edging lower, means another leg down could be on the cards.

To accelerate the downward trend, USD/CAD sellers need a daily close below 1.2445. In that outcome, the first support level would be 1.2421. A breach beneath the latter can push the pair towards the July 16 low at 1.2302.

On the flip side, a daily close above the 200-DMA at 1.2510 could pave the way for further gains. The first resistance would be 1.2600, immediately followed by the 50-DMA at 1.2622.

KEY ADDITIONAL LEVELS TO WATCH