After yesterday’s sharp pull-back from over one-week tops, levels beyond the 1.2900 handle, the USDCAD pair has regained some positive traction on Thursday. The following 24 May USDCAD Technical Outlook provides more insights.
24 May, OctaFX – After yesterday’s sharp pull-back from over one-week tops, levels beyond the 1.2900 handle, the pair regained some positive traction on Thursday. A modest retracement in crude oil prices undermined demand for the commodity-linked currency – Loonie and extended some support to the major.
Weaker oil prices weigh on the commodity-linked Loonie
Oil lost some more ground on Thursday and was being weighed down by the latest EIA report that showed a larger than expected increase in the US crude oil inventories by 5.778 mbpd during the week ended on May 18
Meanwhile, a dovish assessment of the latest FOMC meeting minutes, further reinforced by the ongoing slide in the US Treasury bond yields, prompted some US Dollar profit-taking slide and did little to provide any additional boost.
The officials reaffirmed market expectations for another rate hike in June but signalled no hurry to raise interest rates faster than three times already projected for 2018 and would tolerate inflation overshoot for some time.
Looking at the broader picture, the pair remains within a broader trading band, held over the past two-weeks, with 50-day SMA acting as an important pivot point. Hence, it would be prudent to wait for a decisive break through the mentioned range before positioning for the pair’s next leg of directional move.
24 May USDCAD Technical Outlook
Immediate resistance is pegged near the 1.2875 region, above which the pair is likely to make a fresh attempt to move past the 1.2900 handle and aim towards testing the 1.2945-50 supply zone. On the flip side, 50-day SMA, currently near the 1.2820-15 region, closely followed by the 1.2800 handle might continue to act as immediate support, which if broken might turn the pair vulnerable to slide back towards 1.2750-40 strong horizontal support.
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