USD/CAD Price Analysis: Further recovery hinges on 1.2685 breakout

• USD/CAD grinds higher after bouncing off six-week low, battles key horizontal hurdle.
• RSI, MACD signal further upside but short-term resistance line, 200-SMA will test bulls.
• Two-month-old ascending support line holds the gate for the bear’s entry.

USD/CAD prints mild gains around 1.2670 as bulls battle with nearly two-month-old horizontal resistance during Thursday’s late Asian session.

In doing so, the Loonie pair extends the previous day’s rebound from an upward sloping trend line from early April, which in turn triggered the quote’s bounce off a six-week low.

Given the pair’s sustained bounce off the short-term key support line, as well as bullish MACD signals and firmer RSI (14), USD/CAD prices are likely to keep the latest recovery moves.

However, the quote needs a clear break of 1.2670-85 region, comprising the aforementioned horizontal resistance, to rise further.

Following that, a downward sloping trend line from May 12 and the 200-SMA level, respectively near 1.2770 and 1.2800, will challenge the USD/CAD bulls.

On the contrary, the previously stated support line, near 1.2600 by the press time, limits the pair’s immediate downside.

Should the USD/CAD prices drop below 1.2600, a slump towards the late April swing low near 1.2460 can’t be ruled out.

USD/CAD: Four-hour chart

Trend: Further recovery expected