USD/CAD Price Analysis: Keeps the red near 1.3400 mark, bulls not ready to give up

• USD/CAD comes under renewed selling pressure and is weighed down by a combination of factors.
• An uptick in oil prices underpins the Loonie and exerts pressure amid broad-based USD weakness.
• The mixed technical indicators warrant some caution before placing aggressive directional bets.

The USD/CAD pair meets with a fresh supply on Tuesday and extends the previous day's pullback from the vicinity of the 1.3500 psychological mark, or over a one-week high. The pair remain depressed through the early North American session and is currently trading around the 1.3400 round figure, just a few pips above the daily low.

The US Dollar comes under renewed selling pressure and stalls its recovery momentum from a three-month low, which, in turn, acts as a headwind for the USD/CAD pair. Rising bets for smaller interest rate hikes by the Fed drag the US Treasury bond yields lower, which, along with a positive risk tone, weighs on the safe-haven greenback.

Apart from this, an intraday pickup in crude oil prices underpins the commodity-linked Loonie and also contributes to the offered tone surrounding the USD/CAD pair. That said, worries about the worsening COVID-19 situation in China should keep a lid on any optimism in the markets. This should limit further losses for the USD and the major.

From a technical perspective, the overnight failure near a horizontal support breakpoint now turned resistance, and the subsequent fall favours bearish traders. Moreover, oscillators on the daily chart have been struggling to gain any meaningful positive traction. That said, bullish resilience below the 1.3400 mark warrants some caution.

Hence, it will be prudent to wait for strong follow-through selling before confirming that the recent bounce from the 100-day SMA support has run out of steam. In the meantime, any further fall is likely to find support near the 1.3330-1.3325 area ahead of the 1.3300 mark, which if broken decisively will shift the bias in favour of bearish traders.

On the flip side, daily wing high, around the 1.3455 region, now seems to act as an immediate hurdle. A sustained strength beyond should allow the USD/CAD pair to make a fresh attempt to conquer the 1.3500 round-figure mark. The momentum could then lift spot prices to the 50-day SMA resistance, currently around the 1.3550-1.3555 region.

USD/CAD daily chart

Key levels to watch