USD/CAD Price Analysis: Jumps to near one-month high, seems poised to reclaim 1.3000 mark

• USD/CAD turned positive for the fifth straight day and shot to a near one-month high.
• The technical set-up favours bullish traders and supports prospects for additional gains.
• Any meaningful pullback below the 1.2865 zone would be seen as a buying opportunity.

The USD/CAD pair attracted some dip-buying near the 1.2865 area, the 61.8% Fibonacci retracement level of the 1.3077-1.2518 fall and turned positive for the fifth successive day on Tuesday. The momentum lifted spot prices to a near one-month high, closer to mid-1.2900s during the early North American session.

The US dollar reversed modest intraday losses and inched back closer to a nearly two-decade high touched the previous day. This was seen as a key factor that acted as a tailwind for the USD/CAD pair. Bulls seemed rather unaffected by a fresh leg up in crude oil prices, which tend to underpin the commodity-linked loonie.

The emergence of fresh buying near the previous resistance breakpoint now turned support, and some follow-through strength beyond the 1.2900 mark favours bullish traders. Given that oscillators on the daily chart have been gaining positive traction, the USD/CAD pair seems all set to prolong a one-week-old appreciating move.

Spot prices might now aim to surpass an intermediate hurdle near the 1.2980 region and reclaim the key 1.3000 psychological mark. The upward trajectory could further get extended and allow the USD/CAD pair to challenge the YTD peak, around the 1.3075 region touched on May 12, though the pre-Fed anxiety might cap the upside.

On the flip side, the 1.2870-65 region now becomes immediate strong support to defend. Any further pullback is likely to find decent support near the 1.2820 horizontal zone. This is closely followed by the 1.2800 round-figure mark, which coincides with the 50% Fibo. level and should now act as a strong base for the USD/CAD pair.

A convincing break below could make the pair vulnerable to weaken further below the 1.2760 support zone and drop to the 38.2% Fibo. level, around the 1.2730 area. Some follow-through selling, leading to a subsequent break through the 1.2700 mark, would negate the near-term positive bias and shift the bias in favour of bearish traders.

USD/CAD daily chart

Key levels to watch