USD/CAD Price Analysis: Sticks to modest gains below mid-1.3500s, US PCE data awaited

The USD/CAD pair attracts some buying on Thursday and for now, seems to have stalled a two-day-old corrective slide from the vicinity of a nearly three-month peak, around the 1.3635-1.3640 area touched last week. Spot prices stick to modest intraday gains through the early part of the European session, albeit lack follow-through and remain below mid-1.3500s.

The US Dollar (USD) stages a goodish bounce from the very important 200-day Simple Moving Average (SMA) and snaps a three-day losing streak to a two-week low, which, in turn, acts as a tailwind for the USD/CAD pair. That said, Wednesday's weaker US macro data reaffirms expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and keeping a lid on the Greenback.

Furthermore, Crude Oil prices stand tall near the highest level in more than two weeks and help the commodity-linked Loonie hold its ground, capping the upside for the USD/CAD pair. Traders also refrain from placing aggressive bets and prefer to wait for the release of the US Core PCE Price Index – the Fed's preferred inflation gauge – later during the early North American session.

From a technical perspective, the recent sustained breakout through the 200-day SMA and a subsequent move beyond the 1.3500 psychological mark was seen as a fresh trigger for the USD/CAD bulls. Moreover, the Relative Strength Index (RSI) on the daily chart has eased from the overbought territory and supports prospects for the emergence of some dip-buying, which should help limit the downside.

Some follow-through selling below the 1.3500 mark, however, might expose the 1.3460-1.3455 region (200-day SMA), which if broken decisively would make the USD/CAD pair vulnerable. Spot prices might then accelerate the downfall towards the next relevant support near the 1.3400 round figure en route to the 1.3370 region.

On the flip side, the overnight swing high, around the 1.3575 area, now seems to act as an immediate hurdle ahead of the 1.3600 round figure. Any further more up is more likely to confront resistance near the monthly peak, around the 1.3635-1.3640 area, above which the USD/CAD pair could aim to reclaim the 1.3700 mark and climb further towards the 1.3740-1.3745 resistance zone. The momentum could get extended further towards the 1.3800 round figure en route to the YTD peak, around the 1.3860 area touched in March.

USD/CAD daily chart

Technical levels to watch