USD/CAD rebounds toward 1.2850 as the US dollar stabilizes
- US dollar recovers during the American session, DXY still down sharply.
- Canadian dollar among weakest currencies on Tuesday despite higher crude oil prices.
- USD/CAD finds support above 1.2800.
The USD/CAD bounced to the upside and eared losses on Tuesday after the greenback gained momentum during the American session. The pair printed a fresh daily high at 1.2854 and it is hovering around 1.2845. Earlier on Tuesday it bottomed at 1.2805, the lowest level since May 5.
The US dollar was falling sharply across the board amid risk appetite. During the last hours, the greenback recovered ground after US yields turned to the upside and as US stocks trimmed gains. The US 10-year yield rose from 2.90% to 2.97% and the 30-year yield from 3.11% to 3.16%. The Dow Jones is up by 0.55% or 165 points, down 200 points from the high.
Economic data from the US came in above expectations. Retail Sales rose 0.9% in April against the 0.7% of market consensus (March figures were revised higher). Industrial Production advanced 1.1%, above the 0.5% expected by analysts. The numbers helped the dollar.
The loonie is falling also versus the Australian and the New Zealand dollar, despite higher crude oil prices. The broad correction in markets boosted NZD/CAD and AUD/CAD.
Rebounding from the 20-day SMA
The slide of USD/CAD from the highest level in more than a year found support above the 1.2800 area. The rebound pushed the price back above the 20-day Simple Moving Average at 1.2835. A daily close below the line could open the doors to another test of 1.2800. The next support stands at 1.2770 and 1.2720.
If USD/CAD holds above the 20-day SMA, attention would turn to the next resistance at 1.2855 followed by 1.2870 and 1.2905.
Technical levels