The USD/CAD pair continued scaling higher through the early European session and shot to fresh five-week tops, around the 1.2525-30 region in the last hour.

The pair attracted some dip-buying near the 1.2460-55 region on Thursday and built on the previous day's US CPI-inspired rally of over 115 pips from sub-1.2400 levels. The US consumer prices in October rose at the fastest annual pace since 1990 and reinforced expectations about an early policy tightening by the Fed. This, in turn, continued acting as a tailwind for the US dollar, which climbed to fresh YTD tops and assisted the USD/CAD pair to gain traction for the second successive day. On the other hand, a softer tone around crude oil prices undermined the commodity-linked loonie and provided an additional boost to the USD/CAD pair. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Apart from this, the uptick could further be attributed to some technical buying on a sustained move beyond the very important 200-day SMA. That said, relatively thin liquidity conditions, on the back of a bank holiday in the US and Canada, might hold back bullish traders from placing aggressive bets and keep a lid on any further gains.

According to the daily chart, the loonie is struggling on the upside with resistance at 1.2540 level, where lie both its 100 and 50-day Simple Moving Averages (SMAs). The second barrier to the upside is 1.2739, it’s one month high. If it breaks, the next obstacle that can be tested is 1.2600.

The support level for the pair is at 200-day SMA or 1.2475. The following support for the pair is 21-day SMA 1.2397. The final support is seen at 1.2288 (one month low).

USDCAD meeting our take profit zone

Nov 11 2021