The USD/CAD pair had a minor intraday retracement from descending trend-line resistance.
The technical setup continues to favor bullish traders and suggests that further gains are possible.
To counter the positive outlook, sustained decline below the 100-day SMA is required.
The USD/CAD pair struggled to consolidate on its early rise to two-week highs, and a minor drop from the mid-1.2400s was seen. The currency pair was last seen trading towards the lower end of its daily trading range, around 1.2425-20, down 0.10 percent on the day.
From a technical standpoint, the USD/CAD pair struggled to break past resistance highlighted by a downward sloping trend-line extending from the YTD highs reached in January. The fact that bulls have gained acceptance above the 100-day SMA, on the other hand, suggests that a breakthrough through the indicated barrier is possible.
The fact that technical indicators on the daily chart are comfortably in bullish territory and are still far from being in the overbought zone adds to the positive picture. A move above the June monthly swing highs, around 1.2480-85, will reaffirm the bullish bias and pave the way for more increases.
The USD/CAD pair might then break beyond the psychological level of 1.2500, aiming for the next relevant barrier in the mid-1.2500s. Follow-through purchasing could push the pair even higher, beyond the 1.2635-40 supply zone, past the 1.2600 barrier.
Dips below 1.2400, on the other hand, may continue to attract buying near the 100-day moving average, which is currently at 1.2385. This should now serve as a sturdy base for the USD/CAD pair, and if it is convincingly violated, technical selling could ensue. The pair could potentially drop to the 1.2300 level, close to last week’s swing lows in the mid-1.2200s./n
