- USD/CAD dropped to over a two-week low on Monday amid heavy USD selling bias.
- Modest pullback in oil prices undermined the loonie and helped limit the downside.
- Recovery beyond the 1.2800 mark might confront resistance near the 38.2% Fibo.
The USD/CAD pair came under some renewed selling pressure on Monday and dropped to over a two-week low, around the 1.2770 region amid broad-based US dollar weakness. That said, a modest intraday pullback in crude oil prices undermined the commodity-linked loonie and helped limit any further losses, at least for the time being.
The USD/CAD pair was last seen trading just a few pips below the 1.2800 round-figure mark, still down nearly 0.40% for the day and remains at the mercy of the USD price dynamics.
From a technical perspective, bulls, so far, have managed to defend the 50% Fibonacci retracement level of the 1.2459-1.3077 strong move up. The said support should now act as a pivotal point, which, if broken decisively, will set the stage for an extension of the recent sharp pullback from the highest level since November 2020.
The USD/CAD pair might then accelerate the downfall towards testing intermediate support near the 1.2720-1.2715 region before eventually dropping to sub-1.2700 levels, or the 61.8% Fibo. level. The latter coincides with the 100-day SMA and is followed by the very important 200-day SMA, around the 1.2660-1.2665 zone.
Some follow-through selling would suggest that the USD/CAD pair has topped out in the near-term and prompt fresh technical selling. The subsequent decline has the potential to drag spot prices further towards the 1.2600 mark en-route the next relevant support near the 1.2560 horizontal zone.
On the flip side, attempted recovery back above the 1.2800 mark might now confront stiff resistance near the 38.2% Fibo. level, around the 1.2835-1.2840 region. Sustained strength beyond might trigger a short-covering bounce and allow bulls to reclaim the 1.2900 mark, though any further positive move seems elusive.
USD/CAD daily chart
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Key levels to watch
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