USD/CAD Price Analysis: Surrenders intraday gains, flirts with daily lows near 1.2530

• A combination of factors failed to assist USD/CAD to preserve its early gains to the 1.2565-70 area.
• Sliding US bond yields weighed on the USD; a modest uptick in oil prices underpinned the loonie.
• Sustained weakness below the 1.2500 round figure is needed to confirm a fresh bearish breakdown.

The USD/CAD pair struggled to capitalize on its early positive move and has now retreated around 30 pips from daily swing highs, near the 1.2565-70 region. The pair was last seen trading around the 1.2535 area, up only 0.10% for the day.

The ongoing decline in the US Treasury bond yields failed to assist the US dollar to preserve its intraday gains led by Fed Chair Jerome Powell's upbeat comments on the US economy. Apart from this, a modest uptick in crude oil prices further underpinned the commodity-linked loonie and prompted some selling around the USD/CAD pair.

Looking at the technical picture, the USD/CAD pair has been trending lower along a downward sloping channel over the past four months or so. The top boundary of the mentioned channel coincides with the 1.2625-30 supply zone. Repeated failures near the mentioned barrier add credence to a well-established short-term bearish trend.

Despite the negative set-up, the USD/CAD pair, so far, has managed to hold its neck above the key 1.2500 psychological mark. This represents the 50% Fibonacci level of the 1.2365-1.2647 recent recovery from multi-year lows, which should now act as a key pivotal point for traders and help determine the next leg of a directional move.

Meanwhile, technical indicators on the daily chart are yet to recover fully from the negative territory. Moreover, oscillators on hourly charts have again started drifting into the bearish territory, supporting prospects for further losses. That said, bearish traders might still for sustained weakness below the 1.2500 round-figure mark.

Some follow-through selling below the 61.8% Fibo. level, around the 1.2480-75 region will reaffirm the bearish outlook and turn the USD/CAD pair vulnerable to slide further towards the 1.2400 mark. The downward trajectory could further get extended and allow bearish traders to aim back to challenge multi-year lows, around the 1.2365 region.

On the flip side, the 1.2580 region (23.6% Fibo. level) now seems to act as immediate resistance. This is closely followed by the 1.2600 mark and the 1.2625-30 strong barrier. A convincing breakthrough will be seen as a fresh trigger for bearish traders and prompt some aggressive short-covering move.

The USD/CAD pair might then accelerate the momentum to reclaim the 1.2700 mark. The next relevant resistance is pegged near the 1.2745-50 region, above which the momentum has the potential to lift the pair further towards the 1.28000 mark for the first time since early February.

USD/CAD daily chart

Technical levels to watch