USD/CAD Price Analysis: Retakes 1.3000 and beyond amid stronger USD, sliding oil prices

• A combination of factors assisted USD/CAD to regain strong positive traction on Monday.
• Sliding oil prices undermined the loonie and extended support amid resurgent USD demand.
• Bulls might wait for a sustained move beyond the 1.3080-85 area before placing fresh bets.

The USD/CAD pair caught aggressive bids on Monday and reversed a major part of its losses recorded over the past two trading sessions. The momentum lifted spot prices back above the 1.3000 psychological mark during the first half of the European session and was sponsored by a combination of factors.

Investors remain concerned that a possible global recession, along with the latest COVID-19 outbreak in China, would hurt fuel demand. This, in turn, exerted some downward pressure on crude oil prices, which undermined the commodity-linked loonie. Apart from this, the emergence of fresh US dollar buying provided a goodish lift to the USD/CAD pair.

From a technical perspective, the recent pullback from the 1.3080-1.3085 strong horizontal hurdle, or the YTD peal touched last week, stalled near the 100-period SMA on the 4-hour chart. The said support, currently around the 1.2940 region, should now act as a pivotal point for short-term traders ahead of this week's key event/data risks.

The latest US consumer inflation figures are due for release on Wednesday and will be followed by the Bank of Canada monetary policy decision. Apart from this, traders will take cues from the US monthly Retail Sales data and Prelim Michigan Consumer Sentiment on Friday, which would influence the USD and provide a fresh impetus to the USD/CAD pair.

In the meantime, any subsequent move up is likely to confront resistance near the 1.3065 region. Bulls, however, might wait for a sustained break through the 1.3080-1.3085 strong barrier before positioning for any further gains. Some follow-through buying beyond the 1.3100 round figure would mark a fresh bullish breakout and pave the way for additional gains.

The USD/CAD pair would then aim to surpass an intermediate barrier near the 1.3155-1.3160 region and reclaim the 1.3200 mark. The momentum could further get extended and eventually lift spot prices to the next relevant resistance near the 1.3270 zone.

On the flip side, the 1.2950-1.2945 region might continue to protect the immediate downside. A convincing break below could prompt some technical selling and drag the USD/CAD pair towards the 1.2900 mark. The latter should act as a strong base, which if broken would negate any near-term positive outlook and shift the bias in favour of bearish traders.

USD/CAD 4-hour chart

Key levels to watch