- USD/CAD gained strong positive traction for the second consecutive session on Wednesday.
- Technical indicators support prospects for an eventual break through a descending channel.
- Sustained weakness back below the 1.2570 area is needed to negate the positive outlook.
The USD/CAD pair built on the previous day's strong move up and gained some follow-through traction for the second consecutive session on Wednesday. The momentum pushed the pair further beyond the 1.2600 round-figure mark, to one-week tops during the early European session.
The US dollar staged a modest bounce from two-week lows, which, in turn, was seen as one of the key factor driving the USD/CAD pair higher. Bulls seemed rather unaffected by a positive tone around crude oil prices, which tend to underpin demand for the commodity-linked loonie.
From a technical perspective, the USD/CAD pair has now moved closer to a resistance marked by the top boundary of a four-month-old descending channel. The mentioned barrier is pegged near the 1.2625-30 area, which if cleared decisively will mark a near-term bullish breakout.
Meanwhile, oscillators on the daily chart have just started moving into the positive territory and support prospects for an eventual breakout. This, in turn, will set the stage for an extension of the recent bounce from multi-year lows, around the 1.2365 region touched in March.
Bulls might then aim to surpass an intermediate hurdle near the 1.2665-70 region and push the USD/CAD pair further towards the 1.2700 mark. The upward trajectory could further get extended towards the next relevant resistance near the 1.2740-50 supply zone.
On the flip side, any meaningful pullback below the 1.2600 mark might attract some dip-buying and remain limited near the 1.2575-70 area. Sustained weakness below will negate the positive bias and turn the USD/CAD pair vulnerable to retest the key 1.2500 psychological mark.
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 clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.