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.