USD/CAD traded lower during the European morning Thursday after it hit resistance slightly below the 1.2900 barrier, which coincides with the 61.8% retracement level of the 19th of March – 17th of April decline. Nonetheless, the slide was stopped by the 1.2815 support zone. The pair has been trading in a sideways manner between the two aforementioned zones since the 23rd of April and thus, we prefer to stand neutral for now as far as the short-term outlook is concerned.
We would like to see a clear exit out of the range before we become more confident with regards to the forthcoming directional move of this pair. A break below 1.2815 could signal the downside exit of the range and could set the stage for the 1.2750 hurdle. If that barrier does not prove strong enough to stop the bears, then we may experience more downside extensions, towards our next support of 1.2680.
On the upside, we would like to see a clear move above 1.2900 in order to start examining whether the near-term picture has turned back positive. Such a move could initially aim for the 1.2945 zone, the break of which could see scope for extensions towards the psychological round zone of 1.3000.
Looking at our short-term oscillators, we see that the RSI turned down and fell back below 50, while the MACD lies slightly below its trigger line, near zero. It appears ready to turn negative soon. These indicators suggest that USD/CAD may be poised to trade south for a while more, but as we noted above, we prefer to wait for a clear dip below 1.2815 before we get more confident on that front.
