- USD/CAD fails to attract buyers and is influenced by a combination of diverging forces.
- A downtick in Oil prices undermines the Loonie, though a softer USD caps the upside.
- The mixed technical setup also warrants some caution before placing directional bets.
The USD/CAD pair struggles to capitalize on Friday's bounce from the 1.3415-1.3410 area or a one-week low and oscillates in a narrow range through the early European session on the first day of a new week. Spot prices currently trade around the 1.3460 area, nearly unchanged for the day, and remain below the very important 200-day Simple Moving Average (SMA).
Crude Oil prices kick off the new week on a weaker note in the wake of easing concerns about supply from the Middle East, which is seen undermining the commodity-linked Loonie and acting as a tailwind for the USD/CAD pair. That said, Friday's upbeat domestic jobs report helps limit the downside for the Canadian Dollar (CAD), which, along with a modest US Dollar (USD) downtick keeps a lid on any meaningful appreciating move for the currency pair.
From a technical perspective, the recent failure ahead of mid-1.3600s, or a nearly two-month peak touched last week, constitutes the formation of multiple tops on the daily chart. That said, the lack of strong follow-through selling warrants some caution before positioning for any further losses. Moreover, oscillators on the daily chart – though have been losing traction – are yet to confirm a negative outlook and support prospects for the emergence of some dip-buying.
Hence, Friday's swing low, around the 1.3415-1.3410 area, might continue to protect the immediate downside ahead of the 1.3400 mark. The next relevant support is pegged near the 1.3345 region, or the YTD trough, which if broken decisively will be seen as a fresh trigger for bearish traders. The USD/CAD pair might then accelerate the downward trajectory further towards the 1.3300 mark before dropping to mid-1.3200s and sub-1.3200 levels, or the December swing low.
On the flip side, momentum beyond the 1.3475 area (200-day SMA) is likely to confront resistance near the 1.3500 psychological mark ahead of the 1.3540-1.3545 region, or the multiple-tops. A sustained strength beyond the latter will negate any near-term negative outlook and pave the way for some meaningful appreciating move. The USD/CAD pair might then accelerate the positive move towards the 1.3600 round figure and the 1.3610-1.3615 supply zone.
USD/CAD daily chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.