USD/CAD Price Analysis: Bounces off lows, down little below mid-1.2700s

USD/CAD edged lower on Thursday, albeit lacked any strong follow-through selling.
Weaker oil prices undermined the loonie and extended support amid bullish USD.
A sustained move beyond the 1.2770-75 area will set the stage for further gains.

Haresh Menghani FXStreet

The USD/CAD pair witnessed some selling on Thursday and eroded a part of the previous day's gains to weekly tops. The pair remained on the defensive through the mid-European session, albeit has managed to recover a major part of the early lost ground and was last seen trading around the 1.2740-35 region.

The US dollar was seen consolidating its recent rally to the highest level since September 2020 and was seen as a key factor that acted as a tailwind for the USD/CAD pair. That said, prospects for an early policy tightening by the Fed helped limit any deeper losses for the greenback. Apart from this, a softer tone around crude oil prices undermined the commodity-linked loonie and extended some support to the major.

From a technical perspective, the USD/CAD pair stalled this week's bounce from sub-1.2600 levels near the 1.2770-75 region, just ahead of the 61.8% Fibonacci level of the 1.2896-1.1.2594 pullback. The intraday pullback, however, showed some resilience below the 200-hour SMA and found a decent support near the 38.2% Fibo. level. The mentioned resistance and support levels should now act as a pivotal point for intraday traders.

Meanwhile, technical indicators on daily/4-hour charts maintained their bullish bias and are still far from being in the overbought territory. Moreover, oscillators on the 1-hour chart have again started gaining positive traction and support prospects for a further near-term appreciating move. However, bulls are likely to wait for some follow-through buying beyond the 61.8% Fibo. level before placing aggressive bets.

The USD/CAD pair might then aim to surpass the 1.2800 mark and accelerate the momentum towards the next relevant hurdle near the 1.2830 horizontal support. Some follow-through buying has the potential to lift the pair further to the 1.2900 mark and allow bulls to challenge YTD tops, around mid-1.2900s touched on August 20.

On the flip side, the 1.2705-1.2700 area (38.2% Fibo. level) now seems to protect the immediate downside ahead of the 23.6% Fibo. level, around the 1.2670-65 region. Failure to defend the mentioned support levels will negate the bullish bias and turn the USD/CAD pair vulnerable to slide back towards the 1.2600 mark.

USD/CAD 1-hour chart

Technical levels to watch

USD/CAD

Overview
Today last price	1.2742
Today Daily Change	-0.0012
Today Daily Change %	-0.09
Today daily open	1.2754

Trends
Daily SMA20	1.2676
Daily SMA50	1.2621
Daily SMA100	1.2448
Daily SMA200	1.2521

Levels
Previous Daily High	1.2775
Previous Daily Low	1.2668
Previous Weekly High	1.2896
Previous Weekly Low	1.2634
Previous Monthly High	1.2949
Previous Monthly Low	1.2453
Daily Fibonacci 38.2%	1.2734
Daily Fibonacci 61.8%	1.2709
Daily Pivot Point S1	1.269
Daily Pivot Point S2	1.2626
Daily Pivot Point S3	1.2584
Daily Pivot Point R1	1.2796
Daily Pivot Point R2	1.2839
Daily Pivot Point R3	1.2903

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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