- 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
Technical levels to watch
|Today last price||1.2466|
|Today Daily Change||-0.0011|
|Today Daily Change %||-0.09|
|Today daily open||1.2477|
|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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