USD/CAD to dodge more severe weakness while above 1.2895/92 – Credit Suisse

USD/CAD declined sharply on Friday. Nevertheless, analysts at Credit Suisse stay bullish and expect 1.2895/92 to hold to avoid deeper weakness.

Break above 1.3076 is needed to reinforce the medium-term upside

“Whilst a weekly close above the 200-week moving average and the recent high at 1.3040/76 is needed to confirm a medium-term turn higher, we remain with our bullish stance on the back of the rising moving averages and with weekly MACD momentum turning higher.”

“Above 1.3040/76 would confirm the breakout and see next resistance at 1.3091/3100, with a move above here seeing scope to reach 1.3172, ahead of a potential challenge of the 50% retracement of the 2020/21 downtrend at 1.3334 in due course.”

“Near-term support remains at last week’s low at 1.2895/92, which ideally holds to prevent a more severe weakness.” 

“Whilst a close below 1.2895/92 would likely shift the short-term risk lower again, only below the 55-day moving average and May low at 1.2716/2698 would negate our medium-term upside bias.”