USD/CAD Price Analysis: Recovers from multi-week low, upside potential seems limited

USD/CAD staged an intraday bounce from a fresh multi-week low touched earlier this Thursday.
Geopolitical risks continued benefitting the safe-haven USD and acted as a tailwind for the pair.
Modest pullback in oil prices undermined the loonie and further extended support to the major.

Haresh Menghani FXStreet

The USD/CAD pair reversed an early European session dip to sub-1.2600 levels, or the lowest level since January 26 and was last seen trading nearly unchanged for the day.

Crude oil prices witnessed modest pullback from the multi-year high amid reports that the next round of the Russia-Ukraine peace talks could begin at 12:00 GMT on Thursday. This, in turn, undermined the commodity-linked loonie and extended some support to the USD/CAD pair.

On the other hand, concerns about the economic impact of surging commodity prices following Russia's invasion of Ukraine continued underpinning the safe-haven US dollar. This was seen as another factor that assisted the USD/CAD pair to attract some buying near the 1.2585 area.

From a technical perspective, the overnight post-BoC slide below the 1.2650 horizontal support and the February monthly low, around the 1.2635 region, favours bearish traders. Hence, any meaningful recovery could be seen as a selling opportunity and run the risk of fizzling out quickly.

The negative outlook is reinforced by the fact that technical indicators on the daily chart have just started drifting into bearish territory and are still far from being in the oversold zone. This warrants some caution before confirming that the USD/CAD pair has bottomed out.

Meanwhile, any subsequent move up is more likely to confront immediate resistance near the 1.2650 support breakpoint. The next relevant hurdle is pegged near the 1.2685 region ahead of the 1.2700 mark, which if cleared decisively could negate the near-term bearish outlook.

On the flip side, weakness back below the 1.2600 mark would make the USD/CAD pair vulnerable to test the very important 200-day SMA, around mid-1.2500s. The downward trajectory could further get extended and drag spot prices further towards the key 1.2500 psychological mark.

USD/CAD daily chart

Levels to watch

USD/CAD

Overview
Today last price	1.263
Today Daily Change	-0.0001
Today Daily Change %	-0.01
Today daily open	1.2631

Trends
Daily SMA20	1.272
Daily SMA50	1.2688
Daily SMA100	1.2642
Daily SMA200	1.2568

Levels
Previous Daily High	1.2748
Previous Daily Low	1.263
Previous Weekly High	1.2878
Previous Weekly Low	1.2682
Previous Monthly High	1.2878
Previous Monthly Low	1.2636
Daily Fibonacci 38.2%	1.2675
Daily Fibonacci 61.8%	1.2703
Daily Pivot Point S1	1.2591
Daily Pivot Point S2	1.2552
Daily Pivot Point S3	1.2474
Daily Pivot Point R1	1.2709
Daily Pivot Point R2	1.2787
Daily Pivot Point R3	1.2826

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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