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USD/CAD Holding Intraday Gains

A combination of supporting factors assisted USD/CAD to regain positive traction on Monday. Sliding crude oil prices undermined the loonie and extended support amid modest USD strength. The technical set-up favours bullish traders and supports prospects for additional near-term gains.

The USD/CAD pair held on to its strong intraday gains through the early North American session and was last seen trading around the 1.2610 region, near the multi-week high touched on Friday.

Crude oil prices dropped to the lowest level since March 17 and undermined the commodity-linked loonie. This, in turn, was seen as a key factor that offered some support to the USD/CAD pair amid the underlying bullish sentiment surrounding the US dollar.

Despite the supporting factors, bulls, so far, have struggled to make it through the very important 200-day SMA. The said barrier has been capping the USD/CAD pair over the past three trading sessions and coincides with a descending tren-line support breakpoint.

Oscillators on the daily chart have just started gaining positive traction and support prospects for an eventual breakout through the aforementioned confluence. The USD/CAD pair could then climb to mid-1.2600s, or the 50% Fibonacci level of the 1.2901-1.2403 fall. Some follow-through buying will suggest that the USD/CAD pair has formed a temporary bottom near the 1.2400 mark and pave the way for additional gains. The momentum could then push spot prices towards the 1.2700 mark en-route the 61.8% Fibo. level, around the 1.2715 region.

On the flip side, the 1.2555 region now seems to protect the immediate downside ahead of the 23.6% Fibo. level, around the 1.2525 region. A convincing breakthrough, leading to subsequent weakness below the 1.2500 psychological mark, will shift the bias in favour of bearish traders. The USD/CAD pair would then turn vulnerable to slide back to challenge the YTD low, around the 1.2400 mark, with some intermediate support near the 1.2465 zone.

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