USD/CAD Price Analysis: Downside appears limited amid a bull cross
- USD/CAD consolidates Monday’s pullback from a two-month top.
- The corrective decline appears limited after a bull cross confirmed on the 1D chart.
- Daily RSI edges lower but remains well above the midline.
USD/CAD is posting small losses while trading below 1.2750, as the sellers take a breather after a solid rebound in the US dollar and WTI prices seen on Monday.
The latest drop in the major could be attributed to the renewed weakness in the US dollar across the board, as the markets remain optimistic about the less severe effects of the Omicron covid variant.
Investors look forward to Fed Chair Jerome Powell’s testimony on the CARES Act later on Tuesday, especially after his prepared remarks underscored risks to the economy from the new covid strain.
Also, in focus remains the Canadian GDP data for fresh trading impetus amid ongoing OPEC+ headlines.
Looking at USD/CAD’s daily chart, the bulls are fighting to regain lost ground, looking to take advantage of the bull cross confirmed earlier this Tuesday.
The 14-day Relative Strength Index (RSI) is slightly lower but holds comfortably above the midline, suggesting that buying resurgence could be in the offing.
Bulls will need to cross the daily highs of 1.2766 to seek additional recovery towards the 1.2800 level.
USD/CAD: Daily chart
On the downside, Monday’s low of 1.2721 will offer immediate support to the bullish traders, below which a drop towards the 1.2650 psychological level cannot be ruled out, where Friday’s low coincides.
Further south, bears will challenge the bullish commitments at the 1.2600 mark.
USD/CAD: Additional levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
