USD/CAD Price Analysis: Recovers a part of early losses to multi-month lows

• USD/CAD staged a modest rebound from multi-month lows, around mid-1.3000s.
• Oversold conditions on short-term charts prompted some short-covering move.
• Any subsequent strength might be seen as a selling opportunity and remain capped.

The USD/CAD pair tumbled to fresh multi-month on Friday, albeit managed to recover the early lost ground and was last seen trading just above the 1.3100 mark.

The intraday bearish slide stalled just ahead of a support marked by the lower boundary of a multi-week descending channel, extending from late June/early July. Slightly oversold conditions on short-term charts seemed to be the only factor that prompted some intraday short-covering move on the last trading day of the week.

However, the heavily offered tone surrounding the US dollar might cap the upside. Hence, the attempted recovery move runs the risk of fizzling out rather quickly. Hence, any subsequent strength might still be seen as a selling opportunity and remain capped near the 1.3170 region. That said, some follow-through buying should pave the way for additional gains.

On the flip side, the daily swing lows, around mid-1.3000s, now seems to protect the immediate downside. Below the mentioned level, bears are likely to aim towards challenging the trend-channel support, currently near the 1.3020 region. This is closely followed by the key 1.3000 psychological mark, which now seems to act as a key pivotal point for short-term traders.

USD/CAD 4-hourly chart

Technical levels to watch