USD/CAD Price Analysis: Refreshes daily low, around 1.2800 amid weaker USD/rising oil prices

• A combination of factors attracted fresh selling around USD/CAD on Thursday.
• Rising oil prices underpinned the loonie and exerted pressure amid a weaker USD.
• Sustained break below the 50% Fibo. level will set the stage for additional losses.

The USD/CAD pair surrendered its modest intraday gains and dropped to a fresh daily low, around the 1.2800 mark during the early North American session.

The risk-on impulse - as depicted by strong rally in the equity markets - weighed on aven US dollar amid speculations that the Fed could pause the rate hike cycle later this year. On the other hand, a goodish pickup in crude oil prices underpinned the commodity-linked loonie and attracted some intraday selling around the USD/CAD pair.

From a technical perspective, spot prices, so far, have been struggling to find acceptance above the 38.2% Fibonacci retracement level of the 1.2459-1.3077 strong move up. Apart from this, repeated failures ahead of the 1.2900 mark favour bearish traders and supports prospects for an extension of the recent pullback from the YTD peak.

That said, it will still be prudent to wait for some follow-through selling below the 50% Fibo. level, around the 1.2770-1.2765 region, before positioning for any further downfall. The USD/CAD pair might then accelerate the fall towards the 1.2720-1.2715 intermediate support before eventually dropping to sub-1.2700 levels, or the 61.8% Fibo. level.

On the flip side, the daily swing high, around mid-1.2800s, which coincides with the 38.2% Fibo., now seems to act as an immediate hurdle ahead of the weekly high, around the 1.2885 region. Some follow-through buying, leading to a subsequent move beyond the 1.2900 mark will negate the bearish outlook and prompt a short-covering rally.

The momentum might then push spot prices beyond the 1.2930 zone, or the 23.6% Fibo. level, and allow the USD/CAD pair to aim back to reclaim the 1.3000 psychological mark. The next relevant resistance is pegged near the recent daily closing high, around the 1.3045-1.3050 region, ahead of the YTD peak, around the 1.3075 area.

USD/CAD daily chart

Key levels to watch