USD/CAD Price Analysis: Rebounds towards 50 DMA amid weaker WTI

• USD/CAD remains supported by USD rebound and falling WTI prices.
• Recession fears continue to dent the market sentiment.
• Bulls look to recapture 50 DMA ahead of the FOMC minutes.

USD/CAD is heading back towards the critical 50-Daily Moving Average (DMA) at 1.2901, having found buyers once again near the 1.2830 region.

In doing so, the major is capitalizing on the renewed weakness in WTI prices amid recession fears, which has dragged the black gold to fresh six-month lows near $85.50.

Additionally, risk-aversion-driven safe-haven flows into the US dollar have also aided the rebound in the major. On Tuesday, USD/CAD incurred sizeable losses after softer Canadian inflation data failed to dissuade the Bank of Canada’s (BOC) commitment to combat inflation. BOC Governor Tiff Macklem said, “our job is not done yet,” adding that “we're determined to eliminate high inflation and return to our 2% target.”

Will the Fed minutes throw a dovish surprise? Investors are eagerly awaiting the Fed July meeting minutes to gain fresh insight on the size of the rate increments in the coming months. The US dollar could potentially see a fresh leg up if the world’s most powerful central bank maintains its hawkish rhetoric in its fight against inflation.

From a short-term technical perspective, USD/CAD is looking to retest the 100 DMA barrier but acceptance above the latter is crucial to initiate a meaningful recovery towards the monthly highs of 1.2985.

Ahead of that bulls will be probed by the 1.2950 psychological hurdle.

The 14-day Relative Strength Index (RSI) is edging higher gradually above the midline, supporting the case for the bullish potential.

USD/CAD: Daily chart

On the flip side, the immediate support of the previous resistance at the horizontal 21 DMA of 1.2852 will be tested should sellers fight back control.

The next line of defense for buyers is seen at the mildly bullish 100 DMA at 1.2809, below which the 200 DMA at 1.2752 will come to the rescue.

USD/CAD: Additional levels to consider