USD/CAD Price Analysis: Clings to gains above mid-1.2500s, lacks follow-through

USD/CAD gained some positive traction on Wednesday and recovered the overnight losses.
A combination of factors held bulls from placing aggressive bets and capped any further gains.

Haresh Menghani FXStreet

The USD/CAD pair built on its steady intraday positive move and shot to fresh daily tops, around the 1.2575 region heading into the North American session. The momentum allowed the pair to recover the previous day's losses, though lacked any strong follow-through buying.

Despite a modest pickup in the US Treasury bond yields, the US dollar languished near three-week lows and held bulls from placing aggressive bets. Apart from this, bullish crude oil prices underpinned the commodity-linked loonie and further collaborated towards capping gains.

From a technical perspective, the USD/CAD pair managed to attract some dip-buying near the 1.2525 region, or the lower boundary of the weekly trading range. This is followed by the monthly lows, around the 1.2500 psychological mark, which should act as a key pivotal point.

Looking at the larger picture, the USD/CAD pair has been trending lower along a four-month-old descending channel. This points to a well-established bearish trend. That said, the recent price action over the past four weeks or so has been confined in a broader trading range.

Moreover, neutral technical indicators on the daily chart haven't been supportive of any firm direction. This, in turn, makes it prudent to wait for a sustained break through the trading range before confirming the next leg of a directional move for the USD/CAD pair.

In the meantime, any subsequent positive move is likely to confront some resistance near the 1.2600 mark. This is closely followed by the trend-channel barrier, around the 1.2625-30 supply zone, which if cleared decisively will be seen as a fresh trigger for bullish traders.

The subsequent short-covering move has the potential to lift the USD/CAD pair further towards the 1.2700 round-figure mark. Bulls might then aim to test the next relevant resistance near the 1.2740-50 region.

On the flip side, the 1.2525 region, followed by the 1.2500 mark might continue to protect the immediate downside. Sustained weakness below will negate prospects for any further positive move and set the stage for the resumption of over the one-year-old downward trajectory.

USD/CAD daily chart

Technical levels to watch

USD/CAD

Overview
Today last price	1.2557
Today Daily Change	0.0023
Today Daily Change %	0.18
Today daily open	1.2534

Trends
Daily SMA20	1.2553
Daily SMA50	1.2609
Daily SMA100	1.2699
Daily SMA200	1.2972

Levels
Previous Daily High	1.263
Previous Daily Low	1.2527
Previous Weekly High	1.2635
Previous Weekly Low	1.2502
Previous Monthly High	1.274
Previous Monthly Low	1.2365
Daily Fibonacci 38.2%	1.2566
Daily Fibonacci 61.8%	1.2591
Daily Pivot Point S1	1.2498
Daily Pivot Point S2	1.2461
Daily Pivot Point S3	1.2395
Daily Pivot Point R1	1.26
Daily Pivot Point R2	1.2666
Daily Pivot Point R3	1.2703

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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