- USD/CAD struggled for firm direction and ranged around 1.2500.
- The mixed technical setup warrants some caution before making aggressive directional bets.
- Sustained strength beyond the 200 hourly SMA would set the stage for a significant upside.
The pair USD/CAD traded between tepid gains/minor losses during the early American session and held steady near the key psychological level of 1.2500 after the US NFPs.
Crude oil prices added to the previous day’s sharp losses and undermined the commodity-linked Canadian dollar. This, coupled with sustained buying in US dollars, acted as a tailwind for the USD/CAD pair. The bulls, however, have been struggling to push spot prices above the 200 hourly SMA, currently around the 1.2525 region, which should now act as a pivotal point.
As the technical indicators on the hourly charts have rebounded from the negative territory, the bias appears to be tilted in favor of the bullish traders. That said, the bearish oscillators on the daily chart make it prudent to wait for some follow-up buying beyond the aforementioned barrier before confirming that the USD/CAD pair has bottomed out.
Meanwhile, the 1.2480-1.2475 region now appears to protect the immediate drop ahead of the yearly low, around the 1.2430-1.2425 area touched earlier this week. This is followed by the 1.2400 mark, which if broken decisively will be seen as a further bearish trading trigger and will make the USD/CAD pair vulnerable to prolonging its recent decline.
On the other hand, the bulls are likely to wait for sustained strength beyond the 1.2530-1.2535 area before positioning for any significant upside. The next relevant hurdle is tied near the 1.2560 region, above which the USD/CAD pair is likely to aim to reclaim the 1.2600 mark and test the very important 200-day SMA around the 1.2615 area.
USD/CAD 1 hour chart
Additional technical levels
Source: Fx Street
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