USD/CAD slides closer to mid-1.3400s amid rebounding Oil prices, downside seems cushioned

USD/CAD comes under some selling pressure on Monday and extends Friday’s retracement slide.
Rebounding Oil prices underpin the Loonie and exerts pressure amid subdued USD price action.
Recession fears, hawkish Fed expectations could limit the USD losses and lend support to the pair.

Haresh Menghani FXStreet

The USD/CAD pair attracts some sellers in the vicinity of the 1.3500 psychological mark on Monday and extends its steady descent through the first half of the European session. Spot prices retreat further from the highest level since January 6 touched on Friday and drop to the 1.3455 area, or a fresh daily low in the last hour.

Crude Oil prices gain some positive traction and for now, seem to have snapped a five-day losing streak to over a one-week low touched on Friday. This, in turn, underpins the commodity-linked Loonie and acts as a headwind for the USD/CAD pair amid subdued US Dollar price action. That said, a combination of factors supports prospects for the emergence of some dip-buying at lower levels and warrants caution before positioning for deeper losses.

Worries that rapidly rising borrowing costs will dampen economic growth and dent fuel demand should keep a lid on any further upside for the black liquid. Apart from this, firming expectations that the Fed will stick to its hawkish stance favours the USD bulls. In fact, the markets are now pricing in at least a 25 bps lift-off at the next two FOMC meetings in March and May. This, in turn, validates the positive outlook for the USD/CAD pair.

Traders also seem reluctant amid relatively thin trading volumes on the back of a holiday in the US and Canada. Furthermore, investors are more likely to wait for the latest FOMC meeting minutes, due for release on Wednesday, before placing fresh directional bets. Hence, strong follow-through selling is needed to confirm that the USD/CAD pair's recent positive move witnessed over the past week or so has run its course.

Technical levels to watch

USD/CAD

Overview
Today last price	1.3464
Today Daily Change	-0.0013
Today Daily Change %	-0.10
Today daily open	1.3477

Trends
Daily SMA20	1.3378
Daily SMA50	1.3469
Daily SMA100	1.3517
Daily SMA200	1.3246

Levels
Previous Daily High	1.3538
Previous Daily Low	1.345
Previous Weekly High	1.3538
Previous Weekly Low	1.3274
Previous Monthly High	1.3685
Previous Monthly Low	1.33
Daily Fibonacci 38.2%	1.3504
Daily Fibonacci 61.8%	1.3483
Daily Pivot Point S1	1.3439
Daily Pivot Point S2	1.34
Daily Pivot Point S3	1.3351
Daily Pivot Point R1	1.3526
Daily Pivot Point R2	1.3576
Daily Pivot Point R3	1.3614

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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