USD/CAD holds higher just above 1.2600, what levels to watch out for?

The loonie is the worst performing major currency so far this week

USD/CAD D1 07-04

The pair is keeping slightly higher on the day as the dollar holds decent gains against commodity currencies, keeping with a bounce from yesterday in USD/CAD.

Of note, we are seeing price push back above 1.2600 for the first time in a week as buyers look to try and exert more upside momentum this week.

The recent volatility in oil prices have kept things a little messy for the loonie, with WTI falling back under $60 despite finding some stability in the past two days.

The push back above 1.2600 in USD/CAD now sees buyers take aim at the late March highs at 1.2629-47 and that is the next resistance region to be mindful of.

Further resistance is then seen closer to the 100-day moving average (red line) @ 1.2723 before moving on to the 26 February and 5 March highs @ 1.2737-48.

As for downside levels to watch, sellers need to try and work their way back towards testing the key hourly moving averages @ 1.2558-77.

That will be key in trying to exert more downside pressure towards testing the 1.2500 level and the 61.8 retracement level @ 1.2511.

I would still argue that the loonie has strong upside potential and that the latest move this week is more of a pullback rather than a break in the trend.

However, it would be much more attractive to chase dips in the currency against the likes of the yen and franc – especially if there is any further pullback.

Looking at CAD/JPY:

CAD/JPY H1 07-04

Price has broken below its 50.0 retracement level @ 87.19 with the latest pullback now seeing sellers seize near-term control.

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