- USD/CAD managed to hold above the 1.3000 mark through the first half of the European session.
- Bearish oil prices weighed on the loonie, though a consolidative USD price move capped the upside.
- Investors also seemed reluctant to place aggressive bets ahead of the key FOMC meeting minutes.
The USD/CAD pair struggled to make it through the 1.3075-1.3085 strong horizontal barrier and finally settled over 50 pips off its highest level since November 2020 touched on Tuesday. The subsequent pullback, however, stalled near the 1.3000 psychological mark on Wednesday, which should now act as a pivotal point for intraday traders.
Against the backdrop of growing fears of a global recession, fresh COVID-19 lockdowns in China could stall fuel demand recovery. This, in turn, failed to assist crude oil prices to register any meaningful recovery from over a two-month low, which continued undermining the commodity-linked loonie and acted as a tailwind for the USD/CAD pair.
On the other hand, the US dollar was seen consolidating its recent strong gains to a fresh two-decade high touched on Tuesday. Traders seemed reluctant to place aggressive bets and preferred to wait on the sidelines ahead of the FOMC meeting minutes, due later during the US session. This, in turn, capped the upside for the USD/CAD pair, at least for now.
From a technical perspective, the 1.3075-1.3085 area might continue to act as an immediate strong barrier ahead of the 1.3100 mark, which if cleared would be seen as a fresh trigger for bulls. This should allow the USD/CAD pair to climb further towards the 1.3155-1.3160 intermediate hurdle, en-route the 1.3200 mark and the 1.3270 resistance zone.
On the flip side, the 1.3010-1.3000 region might continue to protect the immediate downside. Some follow-through selling could drag spot prices further towards the 1.2945-1.2940 region. Any further decline could be seen as a buying opportunity and remain limited near the 1.2900 mark, which should act as a strong base for the USD/CAD pair.
USD/CAD daily chart
Key levels to watch