USD/CAD jumps to 1.2765, moves away from multi-year lows

• US dollar moves higher supported by risk aversion.
• USD/CAD erases weekly losses, faces resistance at the 20-day SMA.

The USD/CAD rose to 1.2765, reaching the highest level in three days. It represents a sharp reversal after reaching on Thursday at 1.2623, the lowest intraday level since 2018.

A rally of the US dollar triggered the move in USD/CAD. The greenback gained momentum as equity prices in Wall Street tumbled to the lowest in more than a week. During the last hour, main indexes trimmed losses favoring a small retreat in USD/CAD to 1.2735.

Crude oil prices are falling sharply. The WTI barrel drops by 3% at $52.00. Gold tumbles to $1820. The VIX hit one-week highs before pulling back.

Ahead of a long weekend in the US, the DXY is up by 0.45% about to post the highest close in a month. Lower US yields, neither weaker-than-expected US economic data weighed on the greenback.

From a technical perspective, the USD/CAD continues to move with a dominant bearish bias. In the very short-term, the pair failed for the second week in a row to remain under 1.2650, showing some difficulties on the downside. The recovery of the dollar is facing resistance at the 20-day moving average at 1.2755; the next resistance stands near 1.2790. A daily close above 1.2800 would point to further gains.

Technical levels