- USD/CAD pauses downside movement following the previous day’s move on Friday.
- Bulls remain hopeful near 1.2550 a crucial support level.
- Momentum oscillator trades below midline signifies underlying bearish sentiment.
USD/CAD trades with a cautious tone on Friday in the early Asian trading hours. The pair confides in a narrow trade band with no meaningful traction. At the time of writing, USD/CAD is trading at 1.2551, up 0.02% for the day.
USD/CAD daily chart
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On the daily chart, after testing the high of 1.2896 on September 20, the USD/CAD pair came under selling pressure. The pair took shelter near the 1.2550 and the 1.2540 region for the past three sessions, thus making it a crucial level to trade. If the price sustains above the intraday low, it could move back to the 50-day Simple Moving Average (SMA) at 1.2629, as the first upside target. Next, USD/CAD bulls would attempt to test the 1.2685 horizontal resistance level.
Furthermore, a successful daily closing above the key 1.2700 level could push USD/CAD in the vicinity of September 30 high near the 1.2765 area.
Alternatively, the Moving Average Convergence Divergence (MACD) indicator slips below the midline with a bearish crossover. Any downtick in the MACD would trigger a fresh round of selling for the pair, seeking the first downside target at the 1.2500 horizontal support level. Further, if the price drops below 1.2500, in that case, the USD/CAD bears would seek the low made on August, 2 at 1.2453.
Next, the possibility for the 1.2425 horizontal support level for the spot could not be ruled out.