Renewing selling pressure is applied to USD/CAD, which is also impacted by other variables. A rise in oil prices supports the Canadian dollar and puts pressure on it amid general USD weakness.
Before making strong directional wagers, use care due to the conflicting technical signs.
On Tuesday, the USD/CAD pair encounters new supply and continues the previous day’s fall from close to the psychological level of 1.3500, or over a one-week high. The pair has been trading in the round number of 1.3400, just a few pips above the daily low, and has remained down throughout the early North American session.
The US Dollar experiences fresh selling pressure and loses momentum after reaching a three-month low, adversely affecting the USD/CAD pair. The US Treasury bond rates are being dragged down by increasing expectations for lesser rate increases by the Fed, which, together with a bullish risk tone, puts pressure on the safe-haven dollar.
In addition, a rise in crude oil prices throughout the day supports the commodity-linked Loonie and adds to the positive atmosphere around the USD/CAD pair. That noted concerns about the deteriorating COVID-19 situation in China should restrain any market confidence. This should prevent the USD and the major from suffering more losses.
Technically speaking, the overnight failure at a horizontal support breakpoint that had previously been resistance has now converted into support, and the ensuing decline favors bearish traders. Additionally, oscillators on the daily chart have been finding it difficult to progress. However, the persistence of the positive trend below the 1.3400 level calls for some caution.
Therefore, it will be wise to hold off on verifying that the current recovery from the 100-day SMA support has peaked until there is sufficient follow-through selling. While waiting for the 1.3300 level to be broken, any subsequent decline is anticipated to find support in the 1.3330-1.3325 region, which, if breached, will tilt the bias in favor of bearish traders.
On the other hand, the daily wing high, which is now acting as a barrier, seems to be around 1.3455. The USD/CAD pair should be able to make another effort to break above the 1.3500 round-figure barriers if there is further momentum above. When momentum picks up, spot prices may rise to the 50-day SMA resistance, which is now between 1.3550 and 1.3555.