USD/CAD Price Analysis: Strong move up stalls ahead of 1.2600 mark, bullish bias remains

• USD/CAD continued scaling higher for the fourth consecutive session on Thursday.
• The set-up still favours bullish traders and supports prospects for additional gains.

The USD/CAD pair maintained its strong bid tone through the early North American session, albeit has retreated few pips from the highest level since April 21 touched earlier this Thursday. The pair was last seen trading above mid-1.2500s, still up nearly 0.70% for the day.

An extension of this week's sharp pullback in crude oil prices – from the highest intraday level since November 2014 – continued undermining the commodity-linked loonie. This, in turn, was seen as a key factor that pushed the USD/CAD pair higher for the fourth consecutive session.

However, a goodish rebound in the shared currency and a further decline in the US Treasury bond yields prompted some profit-taking around the US dollar. This, along with an unexpected rise in the US weekly unemployment claims, undermine the USD and capped gains for the USD/CAD pair.

From a technical perspective, overbought RSI on hourly charts seemed to be the only factor that held bullish traders from placing fresh bets. That said, the bias remains tilted in favour of bullish traders and supports prospects for a further near-term appreciating move.

The constructive outlook is reinforced by the fact that the USD/CAD pair earlier this week's found acceptance above the 100-day SMA. A subsequent breakout through a short-term descending trend-line resistance extending from YTD tops adds credence to the bullish bias.

Hence, any meaningful dip might still be seen as a buying opportunity and is more likely to remain limited. The USD/CAD pair remains poised to prolong its upward trajectory and climb further towards testing the very important 200-day SMA hurdle, currently near the 1.2655 region.

On the flip side, immediate support is pegged near the key 1.2500 psychological mark. Any further corrective slide should find decent support near the descending trend-line resistance breakpoint, around mid-1.2400s. The latter might now act as a strong base for the USD/CAD pair.

USD/CAD daily chart

Technical levels to watch