• Fails to attract any buying interest amid subdued USD price-action.
• Bullish oil prices support Loonie and contributed towards capping.
• NAFTA uncertainties helped limit any immediate sharp downside.
The USD/CAD pair struggled to register any meaningful recovery and remained within striking distance of two-week lows, set in the previous session.
The US Dollar extended its weakening trend, triggered by softer US consumer inflation figures, and remained on the defensive through the early European session on Friday. This coupled with a positive tone around crude oil prices underpinned the commodity-linked currency - Loonie and further collaborated towards keeping a lid on any attempted recovery.
Despite a combination of negative factors, investors seemed reluctant to place any aggressive bearish bets amid uncertainties surrounding the North American Free Trade Agreement (NAFTA). The US President Donald Trump warned about excluding Canada if it fails to make concessions, forcing investors to stay on the sidelines and await confirmation of a NAFTA deal.
The pair lacked any firm directional bias and has been oscillating within a narrow trading range around the key 1.30 psychological mark as the focus now shifts to the US economic docket, highlighting the release of monthly retail sales data. This coupled with the prelim UoM US consumer sentiment index might produce some meaningful trading opportunities on the last trading day of the week.
Technical levels to watch
Immediate resistance is pegged near overnight swing high, around the 1.3025 area, above which the pair is likely to aim back towards testing 50-day SMA near the 1.3080 region. On the flip side, bulls might try and defend monthly lows support near the 1.2975 zone, which if broken might turn the pair vulnerable to extend the downfall towards the 1.2900 handle en-route the very important 200-day SMA support near the 1.2865 region.
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