- USD/CAD bounces from nine-day lows to recapture the 1.2800 mark.
- The pair is rescued by the broad rebound in the US dollar amid light trading.
- Bulls remain hopeful while above this critical daily support line.
USD/CAD is staging a solid comeback from nine-day lows of 1.2770, helped by a sharp corrective upside in the US dollar and weaker oil prices.
The greenback is extending the recovery from monthly lows against its major peers, mainly driven by profit-taking ahead of the New Year Eve celebrations.
Meanwhile, a pullback in WTI prices from higher levels also collaborates with the renewed upside in the CAD pair.
Traders now look forward to the US Jobless Claims data for fresh trading impulse but the risk trends and year-end flows will remain the main market drivers.
Looking at USD/CAD’s daily chart, the price has recaptured the critical 21-Daily Moving Average (DMA) at 1.2802, although needs a daily closing above the latter to confirm a bullish reversal from weekly troughs.
If that happens, bulls will then flex their muscles towards the next upside barrier, located at 1.2850. Further up, a rally towards the 1.2900 round number cannot be ruled out.
The fact that the pair trades above all the major DMAs is supportive of the bullish potential. To add, the 14-day Relative Strength Index (RSI) is trading above the midline, pointing to more gains in the making.
USD/CAD: Daily chart
On the flip side, a sharp sell-off towards the December 13 lows of 1.2706 could kick in should the horizontal support line at 1.2770 gets breached on a daily candlestick closing basis.
Further south, the confluence of the upward-sloping 50-DMA and December 9 lows of 1.2648 will be a tough nut to crack for sellers.