USD/CAD fails to close above 200-day SMA, recovers 100-day SMA

• The USD/CAD closed near the 1.3415 area after jumping to a high above 1.3500, above the 200-day SMA.
• The US Dollar saw gains amid cautious market sentiment.
• Rising Oil prices limited the CAD’s decline.

The USD/CAD closed with gains on Tuesday but failed to consolidate above the 200-day Simple  Moving Average (SMA), closing near 1.3415 but securing the 100-day SMA. The USD strengthened on the back of a sour market mood on the US front. On the other hand, the Canadian dollar managed to mitigate its losses, supported by an upward movement in Oil prices, its main export commodity, the West. Both economic calendars remained empty as investors' eyes are on the Consumer Price Index figures from the US, from Jully scheduled for Thursday.

In that sense, investors' expectations on the next Federal Reserve (Fed) movements will dictate the pair's pace in the week. As Jerome Powell stated, that decision will depend on incoming data, and inflation figures from the US will likely impact the bets placed for the next September meeting.

According to the CME FedWatch tool, tightening expectations for the Federal Reserve remains low. The odds of a hike stand near 14% for the September meeting and rise near 30% in November. However, those odds will likely be impacted by inflation figures on Thursday, also dictating the pace for the bond market and the USD.

USD/CAD levels to watch

According to the daily chart, the technical outlook for the USD/CAD remains neutral to bearish as the bulls show signs of bullish exhaustion. The Relative Strength Index (RSI) has turned flat above its midline, while the Moving Average Convergence (MACD) presents neutral green bars. On the bigger picture, the pair is above the 20 and 100-day Simple Moving Averages (SMA) but below the 200-day SMA, suggesting that the bears are struggling to challenge the overall bullish trend and that the buyers still have the upperhand.

Support levels: 1.3320,1.3300, 1.3280.

Resistance levels: 1.3450, 1.3500 (200-day SMA), 1.3550.

USD/CAD Daily chart