The loonie is the worst performing major currency so far this week
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:
Price has broken below its 50.0 retracement level @ 87.19 with the latest pullback now seeing sellers seize near-term control.