On Monday, the USD/CAD gained some positive momentum, recouping some of its post-NFP losses.
The development of dip-buying benefits optimistic traders and enhances the possibility of further rises.
The USD/CAD pair was last seen lingering near the upper end of its daily trading range, above the mid-1.2300s, heading into the North American session.
However, an unexpected spike in the US unemployment rate may have shattered hopes for a Fed tightening of monetary policy sooner than planned. As a result, the US dollar faced headwinds, limiting advances in the USD/CAD pair. Bulls also appeared hesitant to make any big wagers ahead of Monday’s key OPEC+ meeting.
The emergence of modest dip-buying on the first day of a new trading week helped the USD/CAD pair halt its post-NFP fall from a short-term declining trend-line. Since the beginning of 2021, the aforesaid trend-line has been capping the upside and should now operate as a critical decisive point for short-term traders.
Meanwhile, the 100-day SMA, which is now at 1.2385, may function as immediate resistance. This is closely followed by the 1.2400 level, over which the USD/CAD pair is poised to assault the trendline hurdle, which is now in the mid-1.2400s. For bullish traders, a convincing breakthrough will serve as a new catalyst.
The 1.2310-1.2300 region, on the other hand, appears to have developed as instant solid support. Sustained weakening below might trigger technical selling, dragging the USD/CAD down to last week’s swing lows support around the mid-1.2200s. Some follow-through selling might tip the scales back in favor of pessimistic traders in the short term.
The next significant support is located near the 1.2200 mark, just ahead of a strong horizontal resistance breakpoint in the 1.2160-50 range. This should serve as a sturdy basis for the USD/CAD pair, and if it is clearly broken, any further gains will be ruled out./n
