USD/CAD Price Analysis: Clings to gains near multi-week tops ahead of US Retail Sales
- USD/CAD gained strong follow-through traction for the second consecutive session on Tuesday.
- Sustained move beyond 200-DMA, 1.2600 mark has already set the stage for additional gains.
- Investors now await the US Retail Sales, the Fed Chair Powell’s speech a fresh trading impetus.
The USD/CAD pair built on the previous day's positive move and gained some follow-through traction for the second successive day. The momentum pushed the pair to near four-week tops, around the 1.2630 region during the first half of the trading action on Tuesday.
Worries about the economic fallout from the Delta variant of the coronavirus and its impact on fuel demand weighed on crude oil prices, which, in turn, undermined the commodity-linked loonie. Meanwhile, COVID-19 jitters took its toll on the global risk sentiment and benefitted the safe-haven US dollar. This was seen as another factor that extended some support to the USD/CAD pair.
From a technical perspective, the recent pullback from multi-month tops found a decent support near a short-term ascending trend-line extending from early July swing lows. A subsequent strength beyond the 200-day SMA and the 1.2600 mark might have already set the stage for additional gains. Investors now look forward to the US Retail Sales and the Fed Chair Jerome Powell's speech for a fresh impetus.
The constructive setup is further reinforced by bullish technical indicators on the daily chart. Hence, some follow-through strength back towards the 1.2700 level, en-route the 1.2735-40 supply zone, remains a distinct possibility. The momentum could further get extended towards the 1.2775-80 intermediate hurdle before bulls eventually aim back to reclaim the 1.2800 round-figure mark.
On the flip side, any meaningful slide below the 1.2600 mark might now be seen as a buying opportunity. This, in turn, should help limit the downside near the 1.2560 region (200-DMA), which is followed by the ascending trend-line support near the 1.2520 region. Failure to defend the mentioned support levels will negate the positive outlook and prompt some aggressive technical selling.
USD/CAD daily chart
Technical levels to watch