USD/CAD Price Analysis: Bulls await move beyond two-week-old trading range hurdle

• A combination of supporting factors pushed USD/CAD higher for the third successive day.
• Retreating oil prices undermined the loonie and remained supportive amid a stronger USD.
• Bulls, however, struggled to make it through an over two-week-old trading range resistance.

The USD/CAD pair built on last week's goodish recovery move from the 1.2635 area, or the monthly low and gained positive traction for the third successive day on Monday. The momentum pushed spot prices to over a one-week high and was sponsored by a combination of factors.

Despite escalating geopolitical tensions between Russia and the West over Ukraine, crude oil prices witnessed some profit-taking taking from a more than seven-year high. This, in turn, undermined the commodity-linked loonie and extended some support to the USD/CAD pair amid a broad-based US dollar strength.

Bulls, however, struggled to capitalize on the strength and the intraday positive move faltered near the 1.2780-1.2785 region. The said area marks the monthly high and the top end of a familiar trading range held over the past two weeks or so, which should now act as a key pivotal point for short-term traders.

Given that technical indicators on the daily chart have just started gaining some positive traction, a convincing breakthrough will be seen as a fresh trigger for bulls. Some follow-through buying beyond the 1.2800 mark will reaffirm the constructive outlook and pave the way for a further appreciating move.

The next relevant resistance is pegged near the 1.2835 region, above which the USD/CAD pair could extend the momentum towards the 1.2900 mark, with some intermediate hurdle near the 1.2870-75 area.

On the flip side, the 1.2700 mark now seems to protect the immediate downside ahead of Friday’s swing low, around the 1.2670-1.2665 region. This is followed by the 1.2635 area, or the monthly low, which if broken decisively will negate the near-term positive bias and make the USD/CAD pair vulnerable to slide further.

The downward trajectory could then drag spot prices below the 1.2600 mark, towards testing the 1.2570-1.2560 support and the very important 200-day SMA, around the 1.2520-1.2515 zone. This is followed by the key 1.2500 psychological mark, below which the USD/CAD pair could slide to the YTD low, around mid-1.2400s.

USD/CAD daily chart

Key technical levels