USD/CAD Tracks Oil Recovery, Drops Below 1.2950
Tracking a sharp slide in crude oil prices on Monday, the USD/CAD pair moved above 1.3000 key psychological level but faded back below mid-point of 1.3000-1.2900 level on Tuesday.
Renewed
worries over supply glut continues to cap near-term upside for crude,
shrugging off disruption fears on the back of the Canadian wildfires
that have taken more than 2 million barrels a day of production out of
the market. The correlation between the USD/CAD pair and crude oil
prices remains high and as crude oil witnesses a minor recovery on
Tuesday, the USD/CAD pair has turned lower to currently trade at the low
point of the day, near 1.2930 level.
The 1.3000 handle has now
turned a significant important resistance as it did on the way down, as
an important support. Hence, a follow through selling pressure, led by
further recovery in crude oil prices, might trigger some near-term
corrective move for the pair.
Technical levels to watch
Below
1.2900 round figure mark, the pair seems to find immediate support at a
short-term descending trend-channel resistance break-point near
1.2850-45 area. On a subsequent weakness below 1.2850 support, the pair
could be headed back to retest 1.2820-1.2800 handle support.
On
the upside, 1.3000 psychological mark remains key resistance to conquer.
On a sustained break through this key resistance area, the pair seems
set to extend its near-term recovery trend towards testing its next
major resistance near 1.3135-40 zone (April daily closing highs
resistance), with intermediate resistance near 1.3090-1.3100 round
figure mark.
