USD/CAD Price Analysis: Bullish potential intact, seems poised to reclaim 1.3000 mark

• USD/CAD shot to a fresh YTD high on Monday, albeit struggled to capitalize on the move.
• Last week’s breakout through a descending trend-line supports prospects for further gains.
• Any meaningful pullback could still be seen as a buying opportunity and remain limited.

The USD/CAD pair gained positive traction for the third successive session and climbed to a fresh YTD peak, around the 1.2950-1.2955 region on the first day of a new week.

Retreating crude oil prices undermined the commodity-linked loonie and turned out to be a key factor that acted as a tailwind for the USD/CAD pair. That said, modest US dollar pullback from a two-decade high touched earlier this Monday capped gains and forced spot prices to retreat around 30 pips from the daily high.

From a technical perspective, last week's strong move up assisted the USD/CAD pair to confirm a bullish breakout through a downward sloping trend-line extending from December 2021. A subsequent move beyond the 1.2900 mark validated the constructive outlook and supports prospects for a further near-term appreciating move.

Hence, some follow-through strength, towards reclaiming the key 1.3000 psychological mark, remains a distinct possibility amid expectations for a more aggressive policy tightening by the Fed. The momentum could further get extended and pushed the USD/CAD pair towards the next relevant resistance near the 1.3045-1.3050 region.

On the flip side, the 1.2910-1.2900 area now seems to protect the immediate downside ahead of the ascending trend-line resistance breakpoint, currently around mid-1.2800s. Any further pullback might still be seen as a buying opportunity near the 1.2800 round-figure mark, which should now act as a strong base for the USD/CAD pair.

A convincing break below would negate the near-term bullish bias and prompt some technical selling. The USD/CAD pair might then turn vulnerable to accelerate the downfall back towards testing last week's swing low, around the 1.2715-1.2710 region.

USD/CAD daily chart

Key levels to watch