USD/CAD trades with modest losses, holds above mid-1.2600s

A modest USD pullback prompted some selling around USD/CAD on Friday.
Hawkish Fed expectations might help limit any meaningful slide for the USD.
Weaker oil prices could undermine the loonie and lend support to the major.

Haresh Menghani FXStreet

The USD/CAD pair edged lower heading into the European session and was last seen trading near daily lows, around the 1.2655-60 region.

The pair witnessed some selling during the first half of the trading action on Friday and eroded a part of the previous day's positive move amid a modest US dollar downtick. As investors digested Thursday's upbeat US economic releases, the underlying bullish sentiment in the financial markets undermined the safe-haven USD and exerted some pressure on the USD/CAD pair.

That said, expectations for an early policy tightening by the Fed should continue to act as a tailwind for the greenback and help limit any meaningful slide for the USD/CAD pair. Investors started pricing in the possibility of an imminent Fed taper announcement after the US Retail Sales data underscored consumer confidence and pointed to the continuation of economic recovery.

Apart from this, a softer tone around crude oil prices could undermine the commodity-linked loonie and lend some support to the USD/CAD pair. Even from a technical perspective, the pair has been oscillating in a range over the past one week or so. This, in turn, warrants some caution for aggressive bearish traders and before positioning for any further depreciating move.

Market participants now look forward to the release of the Prelim Michigan US Consumer Sentiment Index, due later during the early North American session. This, along with the broader market risk sentiment and the US bond yields, might 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	1.2662
Today Daily Change	-0.0019
Today Daily Change %	-0.15
Today daily open	1.2681

Trends
Daily SMA20	1.2639
Daily SMA50	1.2592
Daily SMA100	1.24
Daily SMA200	1.2524

Levels
Previous Daily High	1.27
Previous Daily Low	1.2617
Previous Weekly High	1.2762
Previous Weekly Low	1.2518
Previous Monthly High	1.2949
Previous Monthly Low	1.2453
Daily Fibonacci 38.2%	1.2668
Daily Fibonacci 61.8%	1.2648
Daily Pivot Point S1	1.2632
Daily Pivot Point S2	1.2583
Daily Pivot Point S3	1.2549
Daily Pivot Point R1	1.2715
Daily Pivot Point R2	1.2749
Daily Pivot Point R3	1.2798

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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