Earlier today, the Loonie strengthened against the greenback as Canada’s 10-year bond yield surged to 13-month highs at 1.481%. This allowed the USDCAD to drop to 3-year lows. However, a boost in the US Durable Goods Orders enabled the greenback to claw back some of these losses and is now trading 0.14% higher than the CAD.
Also lending a hand to the weakness of the Loonie in the last hour is the pullback of crude oil prices on the WTI benchmark.
However, the USD/CAD remains under pressure, as the underlying dovish signals provided by the testimony of Fed Chair Jerome Powell may continue to cap any gains on the USD in the short term. Any rallies in the USD/CAD may turn out to be opportunities for bears to re-establish dominance at cheaper prices.
Technical levels to Watch
The 4-hour chart on the USD/CAD shows that the pullback is testing the combined resistance formed by the channel’s lower border and the 1.25323 price level. A break above this level allows the pair to target the short-term resistance at 1.25862. The channel’s trend line offers itself as an additional barrier as it mingles with the 1.26219 resistance. 1.26647 and 1.27315 serve as additional targets if the bulls can break out of the channel.
On the flip side, we could see rally selling on the pair, with all the listed barriers above serving as potential points where fresh offers may be seen. Ultimately, 1.24480 serves as a downside target for bears seeking to drive the USD/CAD to the 12 February 2018 lows.
USD/CAD Daily Chart