Steady Up-Move in Oil Continues to Hinder Recovery for USD/CAD
Tracking a surge in crude oil prices to a fresh six-month high, the USD/CAD pair has witnessed a steady decline towards 1.2900 handle.
With a high level of correlation with crude oil prices, the USD/CAD pair
hasn't been able to build on to its recovery beyond 1.3000
psychological mark, from a multi-month lower levels touched at the
beginning of this month. O late, oil has been benefiting from subsiding
worries over global supply glut, led by supply distortion from some
non-OPEC producers like Canada, Libya and Nigeria.
Even Friday's stronger-than-expected US monthly retail sales data failed
to assist the pair to surpass recent daily closing highs resistance
near 1.2955-60 area. Subsequently on Monday, the pair weakened from
50-day SMA resistance to drop back towards 1.2900 handle before
recovering some losses to currently trade at 1.2920 level. The pair,
however, continues to trade above short-term moving averages
(5&10-day SMAs) support, which if broken might drag the pair to test
lower levels.
Technical levels to watch
On the immediate downside, 1.2890-80 area (5&10-day SMAs) confluence
region might continue to protect immediate downside. Sustained weakness
below this immediate support now seems to open room for extension of
the near-term weakness back towards 20-day SMA support near 1.2750
region.
On the flip side, a sustained strength above 50-day SMA resistance
(currently near 1.2950), is likely to provide the required momentum to
lift the pair beyond 1.3000 psychological mark resistance. Beyond 1.3000
mark, the momentum is likely to get extended towards the pair’s next
major resistance near 1.3150 area, marking April daily closing highs
resistance.