USDCAD @ 1.28785 – Support/Resistance analysis: Price Analysis: Rebounds towards 50 DMA amid weaker WTI

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USDCAD @ 1.28785 – Support/Resistance analysis: Price Analysis: Rebounds towards 50 DMA amid weaker WTI

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• USD/CAD remains supported by USD rebound and falling WTI prices.
• Recession fears continue to dent the market sentiment.
• Bulls look to recapture 50 DMA ahead of the FOMC minutes.

The pair currently trades last at 1.28785.

The previous day high was 1.2929 while the previous day low was 1.2831. The daily 38.2% Fib levels comes at 1.2868, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2891, expected to provide resistance.

USD/CAD is heading back towards the critical 50-Daily Moving Average (DMA) at 1.2901, having found buyers once again near the 1.2830 region.

In doing so, the major is capitalizing on the renewed weakness in WTI prices amid recession fears, which has dragged the black gold to fresh six-month lows near $85.50.

Additionally, risk-aversion-driven safe-haven flows into the US dollar have also aided the rebound in the major. On Tuesday, USD/CAD incurred sizeable losses after softer Canadian inflation data failed to dissuade the Bank of Canada’s (BOC) commitment to combat inflation. BOC Governor Tiff Macklem said, “our job is not done yet,” adding that “we’re determined to eliminate high inflation and return to our 2% target.”

Will the Fed minutes throw a dovish surprise? Investors are eagerly awaiting the Fed July meeting minutes to gain fresh insight on the size of the rate increments in the coming months. The US dollar could potentially see a fresh leg up if the world’s most powerful central bank maintains its hawkish rhetoric in its fight against inflation.

From a short-term technical perspective, USD/CAD is looking to retest the 100 DMA barrier but acceptance above the latter is crucial to initiate a meaningful recovery towards the monthly highs of 1.2985.

Ahead of that bulls will be probed by the 1.2950 psychological hurdle.

The 14-day Relative Strength Index (RSI) is edging higher gradually above the midline, supporting the case for the bullish potential.

On the flip side, the immediate support of the previous resistance at the horizontal 21 DMA of 1.2852 will be tested should sellers fight back control.

The next line of defense for buyers is seen at the mildly bullish 100 DMA at 1.2809, below which the 200 DMA at 1.2752 will come to the rescue.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.2874 at the time of writing. Pair opened at 1.2845 and is trading with a change of 0.22 % .

The pair is trading above its 20 Daily moving average @ 1.2851, below its 50 Daily moving average @ 1.2895 , above its 100 Daily moving average @ 1.2806 and above its 200 Daily moving average @ 1.275

The previous day high was 1.2929 while the previous day low was 1.2831. The daily 38.2% Fib levels comes at 1.2868, expected to provide support. Similarly, the daily 61.8% fib level is at 1.2891, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.2808, 1.2771, 1.271
• Pivot resistance is noted at 1.2906, 1.2966, 1.3003

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