USD/CAD Holds Resistance Turned Support Near 1.2825
EIA's weekly inventory data released on Wednesday drove oil prices higher and in-turn dragged the USD/CAD pair further below 1.2900 handle to 1.2830.
The pair extended its slide after the US crude inventories shrunk by 3.4 million barrels against the forecast of a nominal rise in inventories. With a high degree of correlation between price of oil and the Canadian dollar, sharp rise in oil prices on Wednesday dragged the pair to erased majority of its gains registered from last Friday. Any further strength in oil prices would continue to drag the pair lower.
Even from technical perspective, the pair is reversing from a very important 1.3000 psychological mark handle and is currently trading close to a short-term descending trend-channel resistance break-point turned support near 1.2830-25 area and there remains possibility of a bounce from current levels.
Technical levels to watch
Bounce-off 1.2830-25 support might now confront immediate supply near 1.2900 round figure mark. A sustained strength above 1.2900 mark, the pair could be headed towards 1.2955-60 strong horizontal resistance, which if conquered set the stage for extension of the pair’s near-term recovery trend beyond 1.3000 psychological mark.
On the flip side, drop below 1.2830-25 resistance turned support has the potential to drag the pair to the mid-point of 1.2800-1.2700 handle (1.2745-40 support zone). Any further weakness might now be limited at 1.2700 round figure mark.