The USDCAD pair is currently placed at near three-month lows, around the 1.3120 region, with bears eyeing a sustained breakthrough the very important 200-day SMA.
January 31, GKFX – The pair extended the overnight sharp retracement slide and remained under some selling pressure for the second consecutive session amid a broad-based US Dollar weakness.
A dovish Fed overnight, reinforced by the ongoing slide in the US Treasury bond yields, kept the USD bulls on the defensive and turned out to be one of the key factors exerting some downward pressure.
Ongoing positive move in oil prices underpin Loonie
Adding to this, crude oil prices built on its positive move for the third straight session and gained additional support from Wednesday's EIA weekly report that showed oil stockpiles rose less than expected. Positive oil prices underpinned demand for the commodity-linked currency - Loonie and further collaborated to the pair's ongoing downfall to the lowest level since Nov. 8.
It would now be interesting to see if bears maintain their dominant position or the pair is able to defend the 200-day SMA as the focus now shifts to the monthly Canadian GDP growth figures, due for release later during the early North-American session.
From the US, second-tier releases of the usual initial weekly jobless claims and Chicago PMI might also be looked upon for some short-term impetus.
USDCAD technical analysis
A convincing breakthrough the mentioned support, leading to a subsequent fall below the 1.3100 handle, now seems to accelerate the fall further towards the next support near mid-1.3000s.
On the flip side, the 1.3150-55 region now seems to act as an immediate resistance, above which a bout of short-covering might assist the pair to aim towards reclaiming the 1.3200 handle.
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