The USD/CAD resumed the downtrend move on Monday, as rising crude oil prices boosted the Loonie.
The only fundamental influence on the pair came from crude oil, where higher prices boosted the commodity-linked CAD to the detriment of its risk-averse counterpart across the border. A barrel of WTI crude oil rose 1.3% as of writing to send prices inching towards $67.
The greenback continues to smart from the Fed’s insistence that the rising consumer inflation was a transient event. Traders hope that the FOMC’s minutes (to be released on Wednesday) will provide some clarity on the issue.
The USD/CAD is down 0.21% as of the time of filing this piece.
Technical Levels to Watch
The 1.20830 support level (18 September 2017 low) remains the price to beat for bears. A breakdown of this price level allows bears to aim for a retest of the 12 May low at 1.20458. If this support collapses, we could see the USD/CAD targeting new multi-year lows at 1.20001 (18 May 2015 low). Below this level, the 20 January 2015 low at 1.19357 makes itself available as a future downside target if the downtrend continues unabated.
On the flip side, a potential rally towards 1.21708 provides an option for recovery. This recovery is only valid if the price takes out this resistance and additional barriers at 1.22467, 1.22748, and 1.23677. 1.24000 is a psychological level that also needs to be surpassed to confirm the reversal of the short-term trend. Otherwise, these price levels are all potential areas where traders could initiate new retracement shorts.