USD/CAD off monthly highs, challenges 1.2600 ahead of Canadian CPI, Fed minutes

USD/CAD eases towards 1.26 amid the US dollar’s retreat.
WTI bounces alongside a recovery in the market sentiment.
Daily chart points to a pullback ahead of Canadian CPI, Fed minutes.

Dhwani Mehta FXStreet

USD/CAD is trading in the red zone for the first time in three days, challenging the 1.2600 level following a rejection just below the 1.2650 level on a couple of occasions.

The pullback in the spot from the monthly highs of 1.2649 can be attributed to a broad-based retreat in the US dollar amid a recovery in the risk sentiment. Markets are shifting their attention from the ongoing covid woes, as they await the FOMC minutes to pan out the Fed’s tapering plans.

Meanwhile, the risk recovery has triggered a rebound in the US oil, lending support to the resource-linked Canadian dollar. WTI jumps back to near $66.50, posting small gains on the day.

The CAD traders also book profits on their short positions ahead of the Bank of Canada Consumer Price Index (CPI) data release. The BOC CPI for July is seen at 2.8% YoY vs. 2.7% previous.

USD/CAD: Technical outlook

Looking at USD/CAD technically, the pair is reversing for a test of the 200-Daily Moving Average (DMA), the previous strong resistance now turned support, at 1.2558.

However, in order to extend the retreat, the bears need to take out the 1.2600 level on a sustained basis.

The 14-day Relative Strength Index (RSI) has turned lower but holds well above the midline, suggesting that any pullback in prices could be a good buying opportunity.

USD/CAD: Daily chart

On the flip side, acceptance below the 200-DMA support could expose the 21-DMA at 1.2542.

Selling pressure is likely to intensify below the latter, opening floors towards 1.2500.

USD/CAD: Additional levels

USD/CAD

Overview
Today last price	1.2609
Today Daily Change	-0.0019
Today Daily Change %	-0.15
Today daily open	1.2628

Trends
Daily SMA20	1.2539
Daily SMA50	1.2448
Daily SMA100	1.2369
Daily SMA200	1.256

Levels
Previous Daily High	1.2649
Previous Daily Low	1.257
Previous Weekly High	1.2589
Previous Weekly Low	1.2489
Previous Monthly High	1.2808
Previous Monthly Low	1.2303
Daily Fibonacci 38.2%	1.2619
Daily Fibonacci 61.8%	1.26
Daily Pivot Point S1	1.2582
Daily Pivot Point S2	1.2536
Daily Pivot Point S3	1.2502
Daily Pivot Point R1	1.2661
Daily Pivot Point R2	1.2695
Daily Pivot Point R3	1.2741

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.

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