The USDCAD currency pair experiences strong demand on Tuesday, leading to a significant increase in value, reaching its highest level in more than two months.

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• USD/CAD catches aggressive bids on Tuesday and rallies to over a two-month top.

The pair currently trades last at 1.34335.

The previous day high was 23.68 while the previous day low was 23.07. The daily 38.2% Fib levels comes at 23.31, expected to provide resistance. Similarly, the daily 61.8% fib level is at 23.45, expected to provide resistance.

The USD/CAD pair gains strong positive traction on Tuesday and rallies to over a two-month peak, around the 1.3435 region during the first half of the European session.

Weaker Chinese trade data revives fears about faltering recovery in the world’s second-largest economy and weighs heavily on Crude Oil prices. Apart from this, expectations that the Bank of Canada (BoC) will pause its interest rate hike campaign undermine the commodity-linked Loonie. Meanwhile, the prospects for further policy tightening by the Federal Reserve (Fed), along with a softer risk tone, boost demand for the safe-haven US Dollar (USD) and provides a goodish lift to the USD/CAD pair.

Spot prices, however, pause near a resistance marked by the 61.8% Fibonacci retracement level of the May-July downfall, though the technical setup supports prospects for a further near-term appreciating move. Acceptance above the 50% Fibo. level and a subsequent strength beyond the 1.3400 mark, or the 100-day Simple Moving Average (SMA), was seen as a fresh trigger for bulls. Moreover, oscillators on the daily chart are placed comfortably in the positive territory and are still far from being in the overbought zone.

That said, the Relative Strength Index (RSI) on the 1-hour chart has moved on the verge of breaking above the 70 mark and is seen holding back traders from placing fresh bullish bets around the USD/CAD. Hence, it will be prudent to wait for some follow-through buying beyond the 1.3435 area or intraday consolidation before positioning for any further gains. Nevertheless, spot prices remain on track to prolong the recent recovery move from the YTD low set in July and aim to reclaim the 1.3500 psychological mark.

On the flip side, the 1.3400 mark, or the 100-day SMA, now seems to protect the immediate downside ahead of the 50% Fibo. level, around the 1.3375-1.3370 area. This is followed by support near the mid-1.3300s and the 1.3300 mark (38.2% Fibo. level). Any subsequent downfall is more likely to attract fresh buying near the 1.3250 horizontal support and remain limited near the 1.3225 region, or the 23.6% Fibo. level. That said, some follow-through selling will negate the positive bias and darg the USD/CAD pair below the 1.3200 mark.

Spot prices might then accelerate the slide towards the 1.3160-1.3150 intermediate support before eventually dropping to challenge the 1.3100 round figure.

Technical Levels: Supports and Resistances

USDCAD currently trading at 23.11 at the time of writing. Pair opened at 23.13 and is trading with a change of -0.09 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 24.35, 50 SMA 23.72, 100 SMA @ 24.06 and 200 SMA @ 23.19.

The previous day high was 23.68 while the previous day low was 23.07. The daily 38.2% Fib levels comes at 23.31, expected to provide resistance. Similarly, the daily 61.8% fib level is at 23.45, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 22.91, 22.68, 22.29
• Pivot resistance is noted at 23.52, 23.91, 24.13

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