The USD/CAD price analysis remains on the defensive during European trading, recently hovering near a 2-month low and just above the mid-1.2500.
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With rising US Treasury bond yields, the US dollar received some buying, which helped the USD/CAD pair find some support near 1.2545. Still, the generally positive sentiment in equity markets was a headwind for the dollar haven and prevented the major currency from recovering significantly.
On Tuesday, dollar bulls were also deterred from aggressive interest rates by less hawkish remarks from Fed Chairman Jerome Powell. During his Senate reappointment hearings, Powell said it might take several months before a decision is made on reducing the central bank’s balance sheet. Nevertheless, investor confidence increased due to allaying fears of a sudden end to monetary support.
On the other hand, bullish crude oil prices continued to support the commodity-linked Canadian dollar, limiting the upside potential of USD/CAD. However, investors appeared reluctant to do so. Instead, they waited on the sidelines for the latest US consumer inflation data, which will be released later in the North American session on Wednesday.
USD/CAD Price Technical Analysis: Broken Demand Zone
(Click on image to enlarge)
The USD/CAD price breaks below the demand zone, indicating strong bearish momentum. We can clearly see a widespread down bar with a very high volume. Therefore, we can expect a minor upside correction towards the broken demand zone. If we find a no demand bar or an upthrust around the demand zone, it will be a great opportunity to sell for a target of 1.2500 ahead of 1.2450.
Alternatively, if we see a shakeout or bottom reversal condition around current levels, we can assume bullish trend reversal with targets at 1.2600, 1.2650, and 1.2700.
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