USD/CAD Price Analysis: Struggles to find acceptance above 100 DMA, bullish potential intact

USD/CAD climbs to its highest level since January and draws support from a combination of factors.
Sliding Crude Oil prices undermines the Loonie and provides a goodish lift amid sustained USD buying.
The overbought RSI on hourly charts fails to assist bulls to find acceptance above the 100-day SMA.

Haresh Menghani FXStreet

The USD/CAD pair builds on this week's goodish rebound from the vicinity of the monthly low and gains strong follow-through traction on Friday. The momentum lifts spot prices to the 1.3535-1.3540 region, or the highest level since January 6, and is sponsored by a combination of factors.

Crude Oil prices tumble to a one-and-half-week low amid worries that rising borrowing costs will dampen economic growth and dent fuel demand. This, in turn, undermines the commodity-linked Loonie, which, along with relentless US Dollar buying, acts as a tailwind for the USD/CAD pair.

From a technical perspective, the overnight sustained strength above the 1.3400 mark, representing the top end of over a two-month-old descending channel, was seen as a fresh trigger for bulls. A subsequent move beyond the 50-day SMA supports prospects for a further appreciating move.

Spot prices, however, struggle to find acceptance above the 100-day SMA amid overbought RSI (14) on hourly charts. Hence, it will be prudent to wait for a convincing break through the said barrier, currently around the 1.3520 region, before placing fresh bullish bets around the USD/CAD pair.

The subsequent positive momentum should allow bulls to surpass an intermediate barrier near the 1.3570 area and aim to reclaim the 1.3600 round-figure mark. The upward trajectory could get extended further towards retesting the YTD peak, around the 1.3680-1.3685 region touched in January.

On the flip side, any subsequent pullback below the 1.3475-1.3470 horizontal resistance breakpoint, coinciding with the 50-day SMA, could be seen as a buying opportunity and remain limited near the 1.3400 mark. The latter should act as a strong base for the USD/CAD pair, which if broken might negate the positive outlook.

USD/CAD daily chart

Key levels to watch

USD/CAD

Overview
Today last price	1.3501
Today Daily Change	0.0044
Today Daily Change %	0.33
Today daily open	1.3457

Trends
Daily SMA20	1.3373
Daily SMA50	1.3473
Daily SMA100	1.3521
Daily SMA200	1.3244

Levels
Previous Daily High	1.3479
Previous Daily Low	1.3358
Previous Weekly High	1.3476
Previous Weekly Low	1.3338
Previous Monthly High	1.3685
Previous Monthly Low	1.33
Daily Fibonacci 38.2%	1.3433
Daily Fibonacci 61.8%	1.3404
Daily Pivot Point S1	1.3383
Daily Pivot Point S2	1.3309
Daily Pivot Point S3	1.3261
Daily Pivot Point R1	1.3505
Daily Pivot Point R2	1.3553
Daily Pivot Point R3	1.3626

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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