USDCAD flirts with 100-day SMA, below mid-1.3200s ahead of Canadian CPI/US Retail Sales

The USDCAD pair struggles to capitalize on its modest intraday uptick to levels just above the 1.3300 mark and turns lower for the second successive day on Wednesday. The pair remains depressed through the first half of the European session and is currently flirting with the 100-day SMA support, around the 1.3230 area, or a nearly two-month low touched on Tuesday.

A goodish recovery in the global risk sentiment prompts fresh selling around the safe-haven US Dollar, which, in turn, is seen as a key factor exerting downward pressure on the USDCAD pair. Investors' turned optimistic after the initial findings suggested that the missile that hit Poland on Tuesday may have been fired by Ukraine at an incoming Russian missile. This, along with firming expectations that the Federal Reserve will soften its hawkish stance, continues to weigh on the greenback.

Apart from this, an intraday bounce in crude oil prices underpins the commodity-linked Loonie and also contributes to the offered tone surrounding the USDCAD pair. That said, concerns about lower fuel consumption in China - amid rising COVID-19 cases - could act as a headwind for the black liquid. This could help limit losses for the USDCAD pair ahead of the latest consumer inflation figures from Canada and the US monthly Retail Sales data, due later during the early North American session.

Even from a technical perspective, the USDCAD pair, so far, has been showing some resilience near the 100-day SMA. This makes it prudent to wait for some follow-through selling below the overnight swing low, around the 1.3225 region, before positioning for further losses. That said, the head and shoulders topping pattern that formed between September and November has still not fallen to even its conservative target at 1.3205 (the 61.8% extension of the pattern's height), and is still far from hitting the 100% extrapolation at around 1.3020, so this suggests the potential for more downside. 

Meanwhile, any attempted recovery might confront a hurdle around the 1.3300 mark and remain capped near the 1.3335 supply zone. The latter should act as a pivotal point, which if cleared might trigger a short-covering rally.

Technical levels to watch