USD/CAD Price Analysis: Remains on the defensive, around 1.2465-60 region


  • A combination of diverging forces failed to provide any impetus to USD/CAD on Monday.
  • Neutral technical indicators on the daily chart warrant some caution for aggressive traders.
  • Sustained weakness below the 1.2400 mark will set the stage for additional near-term losses.

The USD/CAD pair struggled to capitalize on Friday's modest recovery gains from two-and-half-week lows and witnessed a subdued/range-bound price action on the first day of a new trading week.

Investors now seem convinced that the Fed would retain its ultra-lose monetary policy stance for a longer period. This, along with a generally positive tone around the equity markets, dragged the US dollar back closer to one-month lows and acted as a headwind for the USD/CAD pair.

That said, worries the recent rise in infections caused by the fast-spreading Delta variant of the coronavirus could dent fuel demand weighed on crude oil prices. This, in turn, undermined the commodity-linked loonie and helped limit the downside for the USD/CAD pair, at least for now.

From a technical perspective, the USD/CAD pair once again found some support near the 1.2425-20 horizontal zone on Friday. This is closely followed by the 1.2400 mark, or the 50% Fibonacci level of the 1.2007-1.2808 strong move up, which should act as a pivotal point for traders.

Meanwhile, neutral technical indicators on the daily chart haven't been supportive of any firm direction. This, in turn, suggests that the USD/CAD pair might continue to attract some dip-buying at lower levels and the downside is more likely to remain limited near the 1.2420-1.2400 area.

However, a convincing break below will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent pullback from multi-month tops, or levels beyond the 1.2800 mark. The USD/CAD pair might then slide to the 61.8% Fibo. level, around the 1.2315-10 region.

On the flip side, the 38.2% Fibo. level, around the key 1.2500 psychological mark now seems to act as immediate strong resistance. A sustained strength beyond might trigger a short-covering move and push the USD/CAD pair back towards the very important 200-day SMA, around the 1.2585-90 area. The next relevant hurdle above the 1.2600 mark is pegged near the 23.6% Fibo. level, around the 1.2615 region. Some follow-through buying will shift the near-term bias back in favour of bullish traders and allow bulls to aim back to reclaim the 1.2700 round-figure mark.

USD/CAD daily chart

fxsoriginal

Technical levels to watch

USD/CAD

Overview
Today last price 1.2466
Today Daily Change -0.0011
Today Daily Change % -0.09
Today daily open 1.2477
 
Trends
Daily SMA20 1.2533
Daily SMA50 1.2337
Daily SMA100 1.2369
Daily SMA200 1.2598
 
Levels
Previous Daily High 1.2492
Previous Daily Low 1.2422
Previous Weekly High 1.2605
Previous Weekly Low 1.2422
Previous Monthly High 1.2808
Previous Monthly Low 1.2303
Daily Fibonacci 38.2% 1.2465
Daily Fibonacci 61.8% 1.2449
Daily Pivot Point S1 1.2436
Daily Pivot Point S2 1.2394
Daily Pivot Point S3 1.2367
Daily Pivot Point R1 1.2505
Daily Pivot Point R2 1.2533
Daily Pivot Point R3 1.2574

 

 

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