USD/CAD has fallen back below both key hourly moving averages now
The pair has been on a solid run higher to start the year but the latest push above 1.3300 looks to be encountering some exhaustion as the November highs around 1.3319-28 is helping to put a lid on gains for the time being.
Price has now fallen back below 1.3300 and is trading at session lows today around 1.3271.
Notably, price has broken back under both the key hourly moving averages:
That means the near-term bias has turned more bearish once again with some minor support seen around 1.3264-73 at the moment.
The drop over the past two days is largely due to the improved risk mood as the market continues to brush aside concerns surrounding the coronavirus outbreak.
That is helping to underpin the loonie while also pushing some flows out of the greenback against risk currencies - as seen with the aussie and kiwi as well.
The only downside for the loonie is that oil prices are struggling to participate in the rebound seen in risk. Sure, prices are trading up by ~1.5% today but oil continues to struggle to shake off the $50 level and tends to fade gains late in the trading day.
That has been the trend over the past week or so and that is one reason that isn't allowing the loonie to post even more solid gains for now. However, with a technical break as seen above, perhaps things may change.
A break below the minor support region above will open up a move towards the 23.6 retracement level @ 1.3240 with further support then seen at the 200-day MA @ 1.3221.
In any case, just watch for any possible further short covering in oil as Russia looks to give their answer on additional OPEC+ output cuts. Russia tends to be stubborn but at the end of the day, they always agree even though they may not contribute.
That may have the potential to give the loonie an added boost alongside the continued optimism in the market with regards to the virus outbreak right now.
