USD/CAD struggles near multi-month lows, just above mid-1.2300s


  • USD/CAD prolonged its weekly bearish trend and dropped to over three-month lows on Friday.
  • Bullish oil prices underpinned the loonie and exerted pressure amid a subdued USD demand.
  • Oversold RSI on hourly charts warrants some caution before placing aggressive bearish bets.

The USD/CAD pair remained depressed through the Asian session and was last seen hovering near the lowest level since July 6, just above mid-1.2300s.

Crude oil prices held steady near multi-year tops and remained supported by increasing signs of tight supply over the next few months. This, in turn, continued underpinning the commodity-linked loonie and was seen as a key factor that acted as a headwind for the USD/CAD pair amid a subdued US dollar price action.

Despite Wednesday's slightly stronger US CPI report, the USD witnessed a corrective pullback from 13-month tops as investors still seem unconvinced about a sustained period of inflation. This was reinforced by a sharp decline in the longer-dated US Treasury bond yields, which prompted USD long-unwinding trade.

Moreover, the markets now seem to have fully priced in the prospects for an early policy tightening by the Fed. This, along with the prevalent risk-on mood, held traders from placing fresh bullish bets around the safe-haven greenback. This was seen as another factor that exerted some pressure on the USD/CAD pair.

From a technical perspective, the overnight decline below the 1.2400 mark confirmed a bearish break through the lower boundary of a short-term descending channel. This might have already set the stage for further losses, though oversold RSI on hourly charts warrants some caution before placing aggressive bearish bets.

The market focus now shifts to the release of US monthly Retail Sales figures later during the early North American session. This, along with the US bond yields, will influence the USD and provide some impetus to the USD/CAD pair. Traders will further take cues from oil price dynamics for some short-term opportunities.

Technical levels to watch

USD/CAD

Overview
Today last price 1.2362
Today Daily Change -0.0008
Today Daily Change % -0.06
Today daily open 1.237
 
Trends
Daily SMA20 1.2622
Daily SMA50 1.2622
Daily SMA100 1.2497
Daily SMA200 1.2509
 
Levels
Previous Daily High 1.2446
Previous Daily Low 1.2355
Previous Weekly High 1.2655
Previous Weekly Low 1.2452
Previous Monthly High 1.2896
Previous Monthly Low 1.2494
Daily Fibonacci 38.2% 1.239
Daily Fibonacci 61.8% 1.2411
Daily Pivot Point S1 1.2335
Daily Pivot Point S2 1.2299
Daily Pivot Point S3 1.2244
Daily Pivot Point R1 1.2426
Daily Pivot Point R2 1.2481
Daily Pivot Point R3 1.2517

 

 

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