USD/CAD Price Analysis: Struggles near two-week low/50-DMA ahead of Canadian CPI

USD/CAD languished near a two-week low amid the prevalent USD selling bias.
Softer crude oil prices could undermine the loonie and help limit the downside.
Investors await the Canadian CPI report before placing fresh directional bets.

The USD/CAD pair edged lower for the fourth successive day on Wednesday and was last seen trading near a two-week low, just above mid-1.2800s during the first half of the European session.

The US dollar remained on the defensive amid receding bets for a massive 100 bps rate hike by the Federal Reserve on July 27. This, in turn, was seen as a key factor that continued acting as a headwind for the USD/CAD pair. That said, a modest downtick in crude oil prices undermined the commodity-linked loonie and could help limit losses for the USD/CAD pair. Investors might also refrain from placing aggressive bets ahead of the Canadian CPI report.

From a technical perspective, the 1.2850 area represents confluence support – comprising of 50-day SMA and the 50% Fibonacci retracement level of the 1.2517-1.3223 strong rally. This should now act as a key pivotal point for intraday traders and help determine the next leg of a directional move for the USD/CAD pair. Some follow-through selling should pave the way for a fall towards the 1.2830-1.2820 support en-route the 1.2800 round-figure mark.

A convincing break below the latter would be seen as a fresh trigger for bearish traders and make the USD/CAD pair vulnerable to accelerating the fall towards the 1.2700 mark. The downward trajectory could further get extended towards the next relevant support near the 1.2675-1.2665 horizontal zone.

On the flip side, any meaningful recovery attempt might now confront stiff resistance near the 1.2900 mark ahead of the 1.2925-1.2930 region. This is followed by the 38.2% Fibo. level, around the 1.2960 area, which if cleared decisively would suggest that the correction has run its course and pave the way for additional gains.

The USD/CAD pair might then aim to surpass the 1.3000 psychological mark and retest the 1.3075-1.3085 supply zone, coinciding with the 23.6% Fibo. level. The positive momentum could eventually lift spot prices back above the 1.3100 round-figure mark.