USD/CAD sticks to gains above 1.3500 mark, holds comfortably above 100-day SMA

USD/CAD defends 100-day SMA and rebounds from a one-month low touched on Thursday.
Looming recession risks weigh on investors’ sentiment and benefit the safe-haven greenback.
An uptick in oil prices could underpin the Loonie and cap any meaningful gains for the major.

Haresh Menghani FXStreet

The USD/CAD pair attracts some buyers in the vicinity of the 100-day SMA support and stages a modest bounce from a one-month low touched earlier this Thursday. The pair sticks to its intraday recovery gains through the early European session and is currently placed just above the 1.3500 psychological mark.

A softer risk tone assists the safe-haven US Dollar to regain some positive traction, which, in turn, is seen pushing the USD/CAD pair higher. Despite the easing of strict COVID-19 curbs in China, concerns about a deeper global economic downturn continue to weigh on investors' sentiment and keep a lid on any optimism in the markets. That said, a combination of factors might hold back the USD bulls from placing aggressive bets and cap the upside for the major, at least for the time being.

The minutes of the December FOMC policy meeting showed that officials unanimously supported raising borrowing costs at a slower pace. The prospect for smaller rate hikes by the Fed is reinforced by the fact that the US Treasury bond yields remain within the striking distance of a three-week low touched on Wednesday. This should act as a headwind for the USD. Apart from this, an uptick in crude oil prices might underpin the commodity-linked Loonie and warrants caution for the USD/CAD bulls.

Traders now look to the US economic docket, featuring the release of the ADP report on private-sector employment and the usual Weekly Initial Jobless Claims. This, along with the US bond yields and the broader risk sentiment, will drive the USD demand and provide some impetus to the USD/CAD pair. Apart from this, oil price dynamics could contribute to producing short-term trading opportunities. The focus, however, remains on monthly employment details from the US and Canada, due on Friday.

Technical levels to watch

USD/CAD

Overview
Today last price	1.351
Today Daily Change	0.0028
Today Daily Change %	0.21
Today daily open	1.3482

Trends
Daily SMA20	1.3598
Daily SMA50	1.3525
Daily SMA100	1.3465
Daily SMA200	1.3138

Levels
Previous Daily High	1.368
Previous Daily Low	1.3476
Previous Weekly High	1.3612
Previous Weekly Low	1.3484
Previous Monthly High	1.3705
Previous Monthly Low	1.3385
Daily Fibonacci 38.2%	1.3554
Daily Fibonacci 61.8%	1.3603
Daily Pivot Point S1	1.3412
Daily Pivot Point S2	1.3342
Daily Pivot Point S3	1.3208
Daily Pivot Point R1	1.3616
Daily Pivot Point R2	1.375
Daily Pivot Point R3	1.382

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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