- USD/CAD trimmed a part of its intraday gains amid modest USD pullback from a 20-year high.
- Aggressive Fed rate hike bets, the risk-off mood should limit the USD losses and lend support.
- A slump in crude oil prices weighed on the loonie and further acted as a tailwind for the major.
The USD/CAD pair struggled to make it through an intermediate resistance near mid-1.3000s and has now trimmed a part of its intraday gains. Spot prices retreated to the 1.3020-1.3015 region during the early North American session, though the near-term bias still seems tilted in favour of bullish traders.
A further decline in the US Treasury bond yields prompted some US dollar profit-taking following the early uptick to a fresh two-decade high. That said, aggressive Fed rate hike bets, along with the prevalent risk-off mood, helped limit any deeper USD pullback and should act as a tailwind for the USD/CAD pair.
On the other hand, a sharp fall in crude oil prices undermined the commodity-linked loonie and supports prospects for the emergence of some dip-buying around the USD/CAD pair. The black liquid was weighed down by fresh COVID-19 curbs in China, which, along with recession fears, have raised concerns about the fuel demand outlook.
From a technical perspective, the 1.3050 area might continue to act as an immediate hurdle ahead of the YTD peak, around the 1.3080-1.3085 region. This is closely followed by the 1.3100 mark, which if cleared decisively would be seen as a fresh trigger for bulls and set the stage for a further near-term appreciating move.
The USD/CAD pair would then aim to surpass an intermediate barrier near the 1.3155-1.3160 region and accelerate the momentum towards the 1.3200 mark. Bulls might eventually lift spot prices to the next relevant resistance near the 1.3270 zone.
On the flip side, weakness back below the 1.3000 psychological mark could be seen as a buying opportunity and remain limited near the 1.2940-1.2935 support zone. The said region represents the 100-period SMA on the 4-hour chart and should act as a pivotal point, which if broken might prompt aggressive technical selling.
The next relevant support is pegged near the 1.2900 round-figure mark, which if broken decisively would negate any near-term positive bias and make the USD/CAD pair vulnerable. The subsequent fall has the potential to drag spot prices back towards testing monthly low, around the 1.2835 region, en-route the 1.2820-1.2815 support zone.
USD/CAD 4-hour chart
Key levels to watch
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