The USD/CAD pair attracts fresh buying during the Asian session on Tuesday and reverses a major part of the previous day's slide. Crude oil prices come under some renewed selling pressure amid worries that rapidly rising borrowing costs will dampen economic growth and dent fuel demand. This, in turn, weighs on the commodity-linked Loonie, which, along with sustained US Dollar buying, acts as a tailwind for the major.

From a technical perspective, the emergence of fresh buying on Tuesday adds credence to last week's bullish breakout through over a two-month-old descending channel. Moreover, oscillators on the daily chart have just started moving in positive territory and support prospects for additional gains. Hence, a subsequent move back towards challenging the 100-day SMA, currently pegged just above the 1.3500 psychological mark, looks like a distinct possibility.

Some follow-through buying beyond last Friday's swing high, around the 1.3535-1.3540 region, will be seen as a fresh trigger for bulls and set the stage for a further appreciating move. The USD/CAD pair might then surpass an intermediate resistance near the 1.3570 area and aim to reclaim the 1.3600 round figure. The upward trajectory could get extended further towards retesting the YTD peak, around the 1.3680-1.3685 region touched in January.

On the flip side, the 1.3440 horizontal zone now seems to have emerged as immediate support. Any further pullback could be seen as a buying opportunity around the 1.3400 mark and remain limited. That said, a convincing break below the latter might prompt some technical selling and drag the USD/CAD pair towards the 1.3330 intermediate support. Spot prices could eventually drop to the 1.3300 mark en route to the last week's swing low, around the 1.3275-1.3270 region.

USDCAD making major price breakouts

Feb 21 2023