USD/CAD Price Analysis: Climbs to three-day tops, eyeing to reclaim 1.2600 mark

• A combination of factors drove USD/CAD higher through the first half of the European session.
• Bulls await a sustained strength beyond the 1.2585 confluence hurdle and the 23.6% Fibo..level.
• A convincing break below the 1.2500 mark will set the stage for an extension of the recent slide.

The USD/CAD pair added to its intraday gains through the first half of the European session and climbed to three-day tops, around the 1.2585 region in the last hour. A strong follow-through positive move in the US Treasury bond yields continued acting as a tailwind for the US dollar. Apart from this, the ongoing retracement slide in crude oil prices undermined the commodity-linked loonie and provided a modest lift to the USD/CAD pair.

From a technical perspective, bulls now await a sustained move beyond a confluence hurdle comprising of 200-period SMA on the 4-hour chart and a short-term descending trend-line. This is closely followed by the 23.6% Fibonacci level of the 1.2949-1.2494 latest leg down. A sustained strength beyond will suggest that the recent corrective fall from YTD tops has run its course and set the stage for a further near-term appreciating move. The USD/CAD pair might then aim to surpass an intermediate hurdle near the 1.2635-40 supply zone.

The USD/CAD pair could eventually climb beyond the 38.2% Fibo. level, around the 1.2565 region, and aim to reclaim the 1.2600 mark. The positive momentum could further get extended towards the next relevant hurdle, around the 1.2620 region, or the 50% Fibo. level.

On the flip side, immediate support is pegged near the 1.2555 horizontal level ahead of the 1.2525-20 region and the key 1.2500 psychological mark. A convincing break below will be seen as a fresh trigger for bearish traders and turn the USD/CAD pair vulnerable. The pair might then slide towards challenging strong horizontal support near the 1.2430 region before eventually dropping to the 1.2400 round-figure mark.

USD/CAD 4-hour chart

Techincal levels to watch