The USDCAD pair traded with a mild negative bias on Wednesday and eroded a minor part of the previous session's strong upsurge to 4-1/2 month tops. What is next? Find out with today's technical analysis.
November 21, GKFX – A combination of factors helped the pair to build on previous session's modest uptick and prompted some aggressive short-covering rally during the US trading session on Tuesday.
Resurgent US Dollar demand, supported by another brutal sell-off on Wall Street amid global slowdown fears, triggered the initial leg of up-move and assisted the bulls to conquer the 1.3200 handle.
Adding to this, the overnight slump in crude oil prices further undermined demand for the commodity-linked currency - Loonie and further collaborated towards accelerating the upward momentum.
The pair surged through the 1.3300 handle for the first time since late-June, albeit a goodish rebound in oil prices kept a lid on any strong follow-through up-move on Wednesday.
The greenback was also seen consolidating overnight strength and failed to provide any fresh bullish impetus, leading a mildly softer tone through the early European session.
Moving ahead, market participants now look forward to the US economic docket, highlighting the release of durable goods orders, which followed by the weekly crude oil inventories data might produce some meaningful trading opportunities later during the day.
USDCAD Technical Analysis
Any subsequent retracement slide now seems to find some support near the 1.3260-50 region, below which some follow-through long-unwinding trade could accelerate the fall back towards the 1.3200 round figure mark.
On the flip side, the 1.3300 handle now becomes an immediate strong hurdle, which if cleared is likely to lift the pair further towards the 1.3340 intermediate support zone en-route YTD tops, around the 1.3380-85 region.
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