The USD/CAD pair comes under some selling pressure on Thursday and maintains its offered tone heading into the North American session. The pair is currently placed around the 1.3530 region, down less than 0.20% for the day, and so far, has managed to hold its neck above the 100-day Simple Moving Average (SMA).
A goodish recovery in Crude Oil prices underpins the commodity-linked Loonie, which, in turn, is seen as a key factor weighing on the USD/CAD pair. Apart from this, a slight improvement in the global risk sentiment acts as a headwind for the safe-haven US Dollar and exerts additional downward pressure on the major.
That said, elevated US Treasury bond yields, bolstered by the prospects for further policy tightening by the Federal Reserve, should limit any meaningful downside for the Greenback. Furthermore, looming recession risk should cap Oil prices and contribute to limiting the downside for the USD/CAD pair, at least for now.
Related- USD/CAD climbs back closer to 1.3500
From a technical perspective, last week’s sustained breakout through a downward sloping trend-channel was seen as a fresh trigger for bullish traders. A subsequent move and acceptance above the 100-day SMA adds credence to the constructive setup and supports prospects for a further appreciating move for the USD/CAD pair.
Hence, a further decline below the 1.3500 psychological mark could be seen as a buying opportunity and remain limited near the 50-day SMA, currently around the 1.3460 region. This is followed by the 1.3440 horizontal support, which if broken decisively could drag the USD/CAD pair back towards challenging the 1.3400 mark.
Some follow-through selling will negate any near-term positive outlook and prompt aggressive technical selling. The USD/CAD pair might then accelerate the fall further towards testing the next relevant support near the 1.3330-1.3325 region en route to the 1.3300 mark and last week’s swing low, around the 1.3275-1.3270 zone.
On the flip side, the overnight swing high, around the 1.3565-1.3570 area, now seems to act immediate hurdle ahead of the 1.3600 round figure. A sustained strength beyond the latter should allow the USD/CAD bulls to aim back towards retesting the YTD peak, around the 1.3680-1.3685 region touched in January.
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