- USD/CAD holds gains above 1.2800 amid stabilizing US dollar.
- The oil price rebound lends support to the CAD, capping the upside.
- The pair turns lower below 21-DMA after rejection at higher levels.
USD/CAD is off the daily highs near 1.2850 but remains better bid above 1.2800, as bulls find support from the pause in the US dollar sell-off ahead of the US GDP and Canadian Retail Sales data.
The dollar licks its wound following the not-that-hawkish Fed May meeting’s minutes, as it downplayed expectations of a more than 50 bps rate hike in the third quarter.
Meanwhile, the strength in the US oil prices caps the upside in the major, lending support to the resource-linked Canadian dollar.
Looking ahead, the US Q1 GDP revision, Pending Home Sales and the Canadian Retail Sales data will offer fresh trading impetus to USD/CAD traders.
From a short-term technical perspective, USD/CAD bulls have failed to find acceptance at higher levels after Monday’s slump to 1.2765 levels.
The 14-day Relative Strength Index (RSI) is trading listlessly just above the midline, suggesting that the spot lacks a clear directional bias.
Only a sustained move above the horizontal 21-Daily Moving Average (DMA) level at 1.2870 could help initiate a meaningful recovery towards 1.2900.
The 1.2950 psychological level will be the next relevant upside target.
USD/CAD: Daily chart
On the downside, bears need to crack the 1.2765 key demand area to resume the downtrend from May highs of 1.3076.
Further down, the confluence of the 50 and 100-DMAs around 1.2700 will act as strong support, below which the mildly bullish 200-DMA at 1.2663 will come into play.