USD/CAD looks to extend the rebound beyond 1.2900 amid sliding oil prices
- USD/CAD benefits from sliding oil prices despite risk-aversion, USD sell-off.
- USD/CAD bulls gain strength to test the critical daily resistance line at 1.2920.
- Daily RSI remains firmer above 50.00 while 21-DMA acts as strong support.
USD/CAD is extending its recovery into the second straight day this Tuesday, reversing the previous week’s sluggish performance.
The renewed strength in the major can be associated with the continued sell-off in oil prices, as markets remain hopeful for a truce in the Russia-Ukraine war.
Officials from both sides have been trying hard to achieve progress on their peace talks, although the ground realities appear different amid the ongoing missiles attacks on Kyiv.
Meanwhile, markets look to reposition ahead of the critical two-day Fed meeting, which begins later on Tuesday. A profit-taking slide is seen in the US dollar alongside the Treasury yields but the slump in oil prices is helping overcome the bearish pressures on the USD/CAD pair.
Technically, USD/CAD looks to extend its rebound from the bullish 21-Daily Moving Average (DMA) support, now at 1.2753.
In doing so, bulls target the two-month-old rising trendline resistance at 1.2920 on a clear break of the 1.2900 round level.
The 14-day Relative Strength Index (RSI) is pointing higher above the midline, underpinning the bullish potential.
USD/CAD: Daily chart
On the flip side, any retracement will test the daily lows of 1.2814, below which a sharp decline towards the 21-DMA will be in the offing.
A sustained break below the latter will bring strong support at 1.2692 in play. That is the ascending 50-DMA.
USD/CAD: Additional levels to consider
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.
