USD/CAD sits near multi-week tops, awaits a sustained move beyond 1.2600 mark


  • USD/CAD gained traction for the third successive day and refreshed multi-week tops.
  • Weaker crude oil prices undermined the loonie and acted as a tailwind for the major.
  • The strong USD bullish sentiment supports prospects for a further appreciating move.

The USD/CAD pair maintained its bid tone near multi-week tops through the early European session, with bulls looking to build on the momentum beyond the 1.2600 mark.

The pair built on the previous day's bullish breakout momentum through a three-week-old ascending channel and gained some follow-through traction for the third successive day on Friday. A weaker tone around crude oil prices undermined the commodity-linked loonie and acted as a tailwind for the USD/CAD pair amid the prevalent strong bullish sentiment surrounding the US dollar.

In fact, the USD Index shot to 16-month tops earlier today amid expectations that the Fed would adopt a more aggressive policy response to contain stubbornly high inflationary pressures. The bets for an early policy tightening by the Fed increased further after data released on Wednesday showed that the US consumer prices in October rose at the fastest annual pace since 1990.

Meanwhile, the Fed funds futures indicate that the first-rate hike could come as soon as July 2022, which, in turn, remained supportive of elevated US Treasury bond yields. This, along with the cautious mood around the equity markets, continued underpinning the safe-haven greenback and pushed the USD/CAD pair to the highest level since October 6, validating the bullish breakout.

This comes on the back of acceptance above the very important 200-day SMA and supports prospects for an extension of this week's hotter-than-expected US CPI-inspired strong rally from sub-1.2400 levels. That said, overbought RSI (14) on hourly charts warrants some caution for aggressive bullish traders. Nevertheless, the USD/CAD pair remains on track to end the week on a positive note.

Investors now look forward to the US economic docket, highlighting the release of the Prelim Michigan Consumer Sentiment Index. Apart from this, the US bond yields and the broader market risk sentiment will influence the USD. Traders will further take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.

Technical levels to watch

USD/CAD

Overview
Today last price 1.26
Today Daily Change 0.0012
Today Daily Change % 0.10
Today daily open 1.2588
 
Trends
Daily SMA20 1.2404
Daily SMA50 1.2538
Daily SMA100 1.2541
Daily SMA200 1.2475
 
Levels
Previous Daily High 1.2596
Previous Daily Low 1.247
Previous Weekly High 1.248
Previous Weekly Low 1.2352
Previous Monthly High 1.2739
Previous Monthly Low 1.2288
Daily Fibonacci 38.2% 1.2548
Daily Fibonacci 61.8% 1.2518
Daily Pivot Point S1 1.2506
Daily Pivot Point S2 1.2425
Daily Pivot Point S3 1.238
Daily Pivot Point R1 1.2633
Daily Pivot Point R2 1.2678
Daily Pivot Point R3 1.276

 

 

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