USD/CAD Price Analysis: Climbs to fresh YTD top, descending trend-line breakout in play

USD/CAD has gained traction for the second straight day and climbed back closer to the YTD peak.
Sliding crude oil prices undermined the loonie and extended support amid modest USD strength.
Move beyond the 1.2900 mark favours bullish traders and supports prospects for further gains.

Haresh Menghani FXStreet

The USD/CAD pair built on Friday's strong intraday rally from the 1.2720-1.2715 region and climbed to its highest level since March 9 during the early North American session on Monday. The emergence of fresh selling around crude oil undermined the commodity-linked loonie. This, along with the underlying bullish sentiment surrounding the US dollar, acted as a tailwind for spot prices for the second successive day.

From a technical perspective, spot prices are now looking to extend the momentum further beyond a downward-sloping trend-line extending from the December 2021 swing high. A move beyond the previous YTD top, at around the 1.2900 mark, now seems to have confirmed a fresh bullish breakout and supports prospects for additional gains. The USD/CAD pair could now appreciate further and test the 2021 peak, around the 1.2665 region touched in December.

That said, RSI (14) on the daily chart has moved to the verge of breaking into overbought territory and warrants some caution ahead of this week's key event/data risks. The Fed is scheduled to announce its monetary policy decision on Wednesday. This will be followed by the closely watched monthly jobs report from the US (NFP) and Canada, which will play a key role in determining the near-term trajectory for the USD/CAD pair.

In the meantime, any meaningful pullback now seems to find some support near the 1.2860-1.2855 region ahead of the daily low, around the 1.2830 area. This is followed by the 1.2800 round-figure mark, which if broken decisively will negate the positive outlook and prompt aggressive technical selling around the USD/CAD pair. The downward trajectory could then accelerate towards the 1.2720-1.2715 area, en-route to the 1.2700 round-figure mark.

Some follow-through selling would pave the way for a fall towards testing the 1.2650-1.2640 region. The latter marks a horizontal resistance breakpoint and coincides with the very important 200-day SMA, which, in turn, should act as a strong base for the USD/CAD pair and a key pivotal point.

USD/CAD daily chart

Key levels to watch

USD/CAD

Overview
Today last price	1.289
Today Daily Change	0.0045
Today Daily Change %	0.35
Today daily open	1.2845

Trends
Daily SMA20	1.2639
Daily SMA50	1.2656
Daily SMA100	1.2682
Daily SMA200	1.2633

Levels
Previous Daily High	1.2862
Previous Daily Low	1.2719
Previous Weekly High	1.288
Previous Weekly Low	1.2684
Previous Monthly High	1.288
Previous Monthly Low	1.2403
Daily Fibonacci 38.2%	1.2807
Daily Fibonacci 61.8%	1.2774
Daily Pivot Point S1	1.2755
Daily Pivot Point S2	1.2665
Daily Pivot Point S3	1.2612
Daily Pivot Point R1	1.2898
Daily Pivot Point R2	1.2952
Daily Pivot Point R3	1.3042

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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