#USDCAD @ 1.29725 -imp levels: regains traction on Wednesday and reverses a part of the overnight corrective slide.

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• USD/CAD regains traction on Wednesday and reverses a part of the overnight corrective slide.
• Hawkish Fed expectations, the risk-off mood revives the USD demand and remains supportive.
• Recession fears cap oil prices and undermine the loonie, supporting prospects for further gains.

The pair currently trades last at 1.29725.

The previous day high was 1.3063 while the previous day low was 1.2933. The daily 38.2% Fib levels comes at 1.2983, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3014, expected to provide resistance.

The USD/CAD pair catches fresh bids on Wednesday and reverses a part of the previous day’s sharp retracement slide from a six-week high. The pair maintains its bid tone through the early European session and is currently placed near the top end of its daily range, around the 1.2975-1.2980 region.

A combination of factors assists the US dollar to regain positive traction and turns out to be a key factor acting as a tailwind for the USD/CAD pair. The overnight knee-jerk reaction to the dismal US PMI prints turns out to be short-lived amid firming expectations for a further policy tightening by the Fed. In fact, the markets are still pricing in at least a 50 bps Fed rate hike at the September policy meeting. This remains supportive of elevated US Treasury bond yields, which, along with the prevalent risk-off environment, continue to benefit the safe-haven buck.

The market sentiment remains fragile amid growing worries about a global economic downturn and headwinds stemming from China’s COVID-zero policy. Apart from this, fading hopes for an imminent output cut by the major producers capped crude oil prices near the very important 200-day SMA. This, in turn, is undermining the commodity-linked loonie and offering additional support to the USD/CAD pair, supporting prospects for further gains. That said, bulls prefer to wait for a hawkish message from Fed Chair Jerome Powell at the Jackson Hole symposium on Friday.

In the meantime, traders on Wednesday will take cues from the US economic docket – featuring Durable Goods Orders and Pending Home Sales data later during the early North American session. This, along with the US bond yields and the broader market risk sentiment, might drive the USD demand and provide some impetus to the USD/CAD pair. Apart from this, oil price dynamics will be looked upon to grab short-term trading opportunities.

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.2976 at the time of writing. Pair opened at 1.2954 and is trading with a change of 0.17 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 1.2874, 50 SMA 1.2915, 100 SMA @ 1.283 and 200 SMA @ 1.2761.

The previous day high was 1.3063 while the previous day low was 1.2933. The daily 38.2% Fib levels comes at 1.2983, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3014, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.2904, 1.2854, 1.2774
• Pivot resistance is noted at 1.3033, 1.3113, 1.3163

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