USD/CAD Price Analysis: Holds steady above 1.3600, seems poised to appreciate further

• USD/CAD stages a modest intraday recovery move from the 50-day SMA support on Friday.
• Bearish oil prices undermine the Loonie and offer support, though weaker USD caps gains.
• The setup favours bullish traders and supports prospects for a further appreciating move.

The USD/CAD pair defends the 50-day SMA support and attracts some buyers near the 1.3570-1.3565 area on the last day of the week. Crude oil prices maintain the bearish bias near the YTD low, which is seen undermining the commodity-linked Loonie and lending some support to the major. However, the prevalent US Dollar selling bias, amid rising bets for less aggressive rate hikes by the Fed, caps the upside for the USD/CAD pair. Spot prices retreat a few pips from the daily low, though manage to hold above the 1.3600 mark through the early North American session.

From a technical perspective, the recent bounce from confluence support comprising of a nearly three-week-old ascending trend-line and the 100-period SMA on the 4-hour chart favours bullish traders. Moreover, oscillators on daily/4-hourly charts support prospects for additional gains. That said, this week's failure near the 1.3700 mark makes it prudent to wait for some follow-through strength beyond the said handle before placing fresh bullish bets. Nevertheless, the USD/CAD pair still seems poised to test the next relevant resistance near the 1.3745-1.3750 region.

Some follow-through buying has the potential to lift spot prices to the November monthly swing high, around the 1.3800 mark. The USD/CAD pair could eventually appreciate to the 1.3840-1.3850 region en route to the 1.3900 round figure and the YTD peak, around the 1.3975-1.3980 zone.

On the flip side, the 1.3570-1.3560 area (100 DMA) might continue to protect the immediate downside. A convincing break below could accelerate the fall towards the 1.3500 mark. Any subsequent slide, however, could get bought into near the 1.3460-1.3450 confluence support. The latter should act as a pivotal point, which if broken decisively will negate the positive outlook and shift the near-term bias in favour of bearish traders. The USD/CAD pair might then turn vulnerable to weaken below the 1.3400 mark and challenge the 100-day SMA support.

USD/CAD 4-hour chartg

Key levels to watch