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USD/CAD bulls challenging 1.2920-25 supply zone

2018-5-25 16:45:54Market Analysis
USD/CAD bulls challenging 1.2920-25 supply zone

The USD/CAD caught some fresh bids on Friday and is now making a fresh attempt to decisively break through the 1.2920-25 supply zone.


A combination of diverging forced helped the pair to continue gaining positive traction for the fourth consecutive session and build on this week's goodish rebound from the 1.2745 region, 1-1/2 week lows set on Tuesday. 


Pyongyang's measured response to the US President Donald Trump's announcement to call off a key summit with North Korea calmed market nerves. This coupled with a modest uptick in the US Treasury bond yields helped revive the US Dollar demand and remained supportive of the pair's bid tone. 


Meanwhile, the ongoing retracement slide in crude oil prices, further aggravated by news reports that OPEC and non-OPEC members discussed increasing oil output by around 1 mbpd, further weighed on the commodity-linked currency - Loonie and provided an additional boost.


It, however, remains to be seen if the pair is able to make it through its the 1.2920-25 region, which has been acting as an important hurdle over the past two-weeks. 


Moving ahead, today's release of the US durable goods orders and a scheduled speech by the Fed Chair Jerome Powell would now be looked upon for some meaningful impetus on the last trading day of the week. 


Technical levels to watch


A follow-through buying interest has the potential to continue lifting the pair further towards reclaiming the key 1.30 psychological mark with some intermediate resistance near mid-1.2900s. On the flip side, the 1.2880-75 region now seems to protect the immediate downside, which if broken might prompt some aggressive selling and drag the pair back towards 50-day SMA support near the 1.2820-15 region.