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The US dollar is holding firm above the 1.2800 level against the Canadian dollar, as risk-off sentiment due to fears over the Omicron variant causes commodity prices to remain pressures.
Much of the Canadian dollar’s gains come from positive sentiment and rising oil price. With crude price depressed under the $70.00 handle it is making it hard for the Canadian dollar to rally.
Encouragingly for the Canadian dollar bulls, the US dollar index is also showing some signs of upside exhaustion, as it struggles to break to new 2021 highs, we could soon finally see some profit taking in the USDCAD pair.
Something to note is the USDCAD pair has built huge amount of bearish MACD price divergence during its 300-point run from the 1.2500 level towards current trading levels above 1.2800.
If we see a move higher in oil price over the coming days we could be seeing a much wider correction coming for the USDCAD pair. I would suggest keeping a close eye on the 1.2780 to 1.2740 levels.
Additionally, we need to pay attention to the incoming jobs reports from both the United States and the Canadian economies. This new drivers, and ofcourse COVID-19 news, are going to be the big factors for the USDCAD pair.
Relatively neutral levels of sentiment are still seen towards the USDCAD pair, with some 46 percent of traders holding a bullish view towards the USDCAD pair. This bullish sentiment has dropped a lot since last week, so a wider correction is certainly possible.
USDCAD Short-Term Technical Analysis
The four-hour time frame currently shows that huge amount of bearish MACD price divergence has built during the recent epic rally towards the 1.2835 resistance level.
With significant amounts of bearish MACD price divergence formed during this recent price rise, a pullback towards the 1.2500 support area seems likely. Watch out for further losses if the pair trades below the 1.2700 level.
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USDCAD Medium-Term Technical Analysis
A bearish triple-top continues to form over the USDCAD pair, with the recent series of upside failure above the 1.2900 resistance levels helping to shape the bearish triple tops.
A forth technical rejection has also happened, meaning a forth major lower high could have just formed. A slump back down towards the 1.2500 level seems likely if this week’s high holds, plus MACD divergence is also present on the daily time frame.
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