- USD/CAD witnessed a modest intraday pullback from a descending trend-line resistance.
- The technical set-up still favours bullish traders and supports prospects for further gains.
- Sustained weakness below 100-day SMA is needed to negate the constructive outlook.
The USD/CAD pair struggled to capitalize on its early uptick to two-week tops and witnessed a modest pullback from mid-1.2400s. The pair was last seen trading near the lower end of its daily trading range, around the 1.2425-20 region, down 0.10% for the day.
From a technical perspective, the USD/CAD pair continued with its struggle to make it through a resistance marked by a downward sloping trend-line extending from YTD tops touched in January. However, the fact that bulls have found acceptance above 100-day SMA supports prospects for an eventual breakout through the mentioned barrier.
The constructive outlook is reinforced by the fact that technical indicators on the daily chart are holding comfortably in the bullish territory and are still far from being in the overbought zone. A subsequent move beyond June monthly swing highs, around the 1.2480-85 region will reaffirm the bullish bias and set the stage for additional gains.
The USD/CAD pair might then surpass the key 1.2500 psychological mark and aim to test the next relevant resistance near mid-1.2500s. Some follow-through buying has the potential to lift the pair further beyond the 1.2600 mark, towards the 1.2635-40 supply zone.
On the flip side, dips below the 1.2400 mark might continue to attract some buying near 100-DMA, currently around the 1.2385 region. This should now act as a strong base for the USD/CAD pair, which if broken decisively might prompt some technical selling. The pair might then slide to the 1.2300 mark en-route last week's swing lows, around mid-1.2200s.
USD/CAD daily chart
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Technical levels to watch
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