USD/CAD bounces off 1.2850, awaits US retail sales data for further direction

The USD/CAD pair recovers from a minor dip to 1.2852 and is now inching closer to session high level of 1.2880 as crude oil witnesses a profit taking move on the downside.

Crude oil is witnessing a minor profit taking move from a 6-month high level of $47.00 touched during NY session on Thursday ahead of the US economic releases, namely - monthly retail sales, PPI and UoM consumer sentiment index, later during the NA session. With a high degree of correlation between crude oil prices and the Canadian Dollar, the later witnessing some weakness against its US counterpart.

From technical perspective, the USD/CAD pair continues to trade above short-term moving averages (10, 20-day SMAs). This coupled with RSI reading above 50 seems to indicate further near-term upside for the pair.

Technical levels to watch

On a sustained move above 1.2900 round figure mark resistance, the pair seems to immediately aim towards tapping 50-day SMA resistance near 1.2955-60 region, which if conquered has the potential to continue boosting the pair back toward the very important 1.3000 psychological mark resistance.

On the flip side, weakness below 1.2850-45 immediate support (nearing 10-day SMA) seems to drag the pair back towards retesting Thursday’s low support near 1.2780-75 region. A convincing break below 1.2780-75 support now seems to trigger a sharp slide towards its next major support near 1.2720-15 zone.