The USD/CAD pair trimmed a part of its intraday losses and was last seen hovering around mid-1.2700s heading into the North American session.

A combination of supporting factors assisted the USD/CAD pair to attract some dip-buying near the 1.2720 area on Monday, though the uptick lacked bullish conviction or a strong follow-through. An intraday pullback in crude oil prices undermined the commodity-linked loonie. Apart from this, the not so hawkish Bank of Canada rate decision to leave the benchmark interest rate unchanged last week continued weighing on the Canadian dollar and extended some support to the USD/CAD pair.

the Loonie pair takes a U-turn from a two-month-old horizontal area around 1.2780-85 but bullish MACD signals keep sellers unconvinced around the 50-DMA level of 1.2715.

Even if the USD/CAD bears manage to conquer the 1.2715 level, 50% Fibonacci retracement (Fibo.) of October-December advances, near 1.2630, will be in focus as a break of which will direct the pair towards the 200-DMA level of 1.2507.

On the contrary, a clear upside break of 1.2785 immediate hurdle will need validation from the monthly high of 1.2813 to recall the USD/CAD bulls.

Following that, multiple tops marked during late 2021 around 1.2850 and 1.2900 will challenge the pair buyers before directing them to the year 2021 peak of 1.2964.

Overall, USD/CAD bulls take a breather amid a sluggish start to the crucial week.

Considering a lack of major data/events on Monday, USD/CAD prices may rely on the risk catalysts while Friday’s jobs report for the US and Canada will be crucial.

Further Weakness May Dominate The Loonie

Jan 31 2022