- USD / CAD continued to climb higher for the fourth consecutive session on Thursday.
- The setup still favors bullish traders and supports the prospects for additional earnings.
The pair USD / CAD It maintained its strong tone offered during the early days of the American session, although it has fallen a few pips from the highest level since April 21 touched earlier this Thursday. The pair was last seen trading above 1.2550, up 0.70% on the day.
An extension of this week’s sharp decline in crude oil prices, from the highest intraday level since November 2014, continued to undermine the Canadian dollar pegged to commodities. This, in turn, was seen as a key factor that pushed the USD / CAD pair higher for the fourth consecutive session.
However, a positive rally in the shared currency and a further decline in US Treasury yields led to some profit-taking around the US dollar. This, coupled with an unexpected spike in weekly US jobless claims, undermines the USD and limits gains for the USD / CAD pair.
From a technical perspective, the overbought RSI on the hourly charts seemed to be the only factor preventing bullish traders from placing new bets. That being said, the bias remains tilted in favor of bullish traders and supports the prospects for a further short-term appreciation move.
The constructive outlook is bolstered by the fact that the USD / CAD pair earlier this week found acceptance above the 100-day SMA. A subsequent break through a short-term downtrend line resistance extending from the yearly highs adds credibility to the bullish bias.
Therefore, any significant drop could be seen as a buying opportunity and is more likely to remain limited. The USD / CAD pair remains ready to prolong its upward trajectory and scale further to test the major hurdle of the 200-day SMA, currently near the 1.2655 region.
On the other hand, immediate support is tied to the key psychological level of 1.2500. Any further corrective decline should find decent support near the resistance break point of the downtrend line, around the mid-1.2400. The latter could now act as a solid foundation for the USD / CAD pair.
Daily chart
Technical levels
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