The greenback has had a rough couple of weeks against its northern rival, with USD/CAD shedding nearly 500 pips since peaking above 1.30 in mid-May.
Amidst oil prices (strongly correlated with the loonie) surging and hints of a potential second half “pause” to the Fed’s rate hiking cycle, it’s not surprising that traders have been shifting their marginal dollars north of the 49th parallel, but the pair is now testing a key support level in the mid-1.2500s. The 78.6% Fibonacci retracement of the year-to-date range comes in at 1.2548 and, so far today, USD/CAD bulls are defending that level (this morning’s mixed US jobs report may be prompting some profit taking as well).
Looking ahead, USD/CAD could bounce toward the mid-1.2600s and still remain within its recent bearish channel, so it would likely take a break above 1.2680 resistance to shift the near-term bias to bullish. Meanwhile, a break below the 1.2550 area would point toward a potential bearish continuation toward the April lows in the mid-1.2400s.
Amidst oil prices (strongly correlated with the loonie) surging and hints of a potential second half “pause” to the Fed’s rate hiking cycle, it’s not surprising that traders have been shifting their marginal dollars north of the 49th parallel, but the pair is now testing a key support level in the mid-1.2500s. The 78.6% Fibonacci retracement of the year-to-date range comes in at 1.2548 and, so far today, USD/CAD bulls are defending that level (this morning’s mixed US jobs report may be prompting some profit taking as well).
Looking ahead, USD/CAD could bounce toward the mid-1.2600s and still remain within its recent bearish channel, so it would likely take a break above 1.2680 resistance to shift the near-term bias to bullish. Meanwhile, a break below the 1.2550 area would point toward a potential bearish continuation toward the April lows in the mid-1.2400s.