USD/CAD testing bullish commitments at 200-DMA ahead of US Retail Sales

• USD/CAD stalls rebound from two-month lows of 1.2453 amid DXY weakness.
• The retreat in WTI prices fails to deter CAD bulls ahead of key US Retail Sales.
• The pair clings onto the 200-DMA, bears await acceptance below that support.

USD/CAD is battling 1.2500, unable to sustain the recovery rally from nine-week lows of 1.2453 reached on Thursday.

The persistent weakness in the US dollar, despite the uptick in the Treasury yields, recalls sellers, as investors remain wary ahead of the critical US Retail Sales and prelim UoM Consumer Sentiment releases.

The currency pair shrugs off the pullback in WTI price from a two-month top of $82.45, as CAD bulls remain undeterred. Oil prices ease from higher levels amid dwindling energy demand from China and concerns that the US may soon act to cool off prices. China's annual crude oil imports slid 5.4% in 2021, dropping for the first time since 2001.

Technically, USD/CAD is testing the bullish commitments at the critical 200-Daily Moving Average (DMA) at 1.2501, having managed to recapture the latter on Thursday after a sharp sell-off under the key support level.

A sustained move below the latter will call for a retest of the two-month lows near 1.2450, below which the further downside will open up towards 1.2400.

The 14-day Relative Strength Index (RSI) is holding well below the midline, suggesting that the rebound was short-lived.

USD/CAD: Daily chart

On the other hand, if the recovery momentum revives, then bulls could once again move towards the 1.2550 psychological barrier.

The next relevant bullish target is then seen at Wednesday’s high of 1.2579, paving way for a fresh advance towards 1.2600 – the round level.

USD/CAD: Additional levels to consider