The USD/CAD currency pair on Tuesday surged to trade at a new 2-month high of about 1.2514 before pulling back to 1.2418 on Wednesday. The currency pair continues to trade within an ascending channel formation in the 60-min chart.

Wednesday’s pullback came at the back of a disappointing US ISM Services PMIs. The pair returned to the normal trading zone after rejecting a crossover to overbought conditions. It remains several levels above the 100-hour moving average.

USD/CAD Fundamentals Overview

From a fundamental perspective, the USD/CAD currency pair is trading at the back of a relatively busy period in the US market. On Tuesday, the US ISM Services PMI for June missed the expectation of 63.5 with 60.1. The ISM Services Employment Index also came short of 57 with 49.3 while both the Services Prices Paid and the New Orders Index PMIs outshone expectations with 79.5 and 62.1 versus 79.3 and 60.3, respectively. On the other hand, US Markit Services PMI and the PMI Composite both missed the expectations of 64.8 and 63.9 with 64.6 and 63.7, respectively.

In Canada, the seasonally-adjusted Ivey purchasing managers’ index for June came in at 71.9 versus the previous reading of 64.7. The general Ivey purchasing managers’ index for the period improved to 67.7 up from 59.8 reported in the previous period.

USD/CAD Technical Analysis (the 60-min Chart)

Technically, the USD/CAD currency pair appears to be trading within an ascending channel formation in the 60-min chart. The pair recently pulled back from overbought conditions to return to the normal trading zone of the 14-hour RSI. It retains a short-term bullish bias.

The bulls will be targeting short-term profits at around 1.2513 or higher at 1.2552. On the other hand, the bears will look to pounce for profits at around 1.2451 or lower at 1.2417.

USD/CAD Technical Analysis (the Daily Chart)

In the daily chart, the USD/CAD currency pair appears to have recently made a bullish breakout from a descending channel formation. This indicates a significant shift in the market sentiment from bearish to bullish. The currency pair is closer to crossing to overbought conditions in the 14-day RSI.

The bulls will be looking to ride the current reversal towards 1.2623 or higher to 1.2739. On the other hand, the bears will target potential long-term pullbacks at around 1.2372 or lower at 1.2251.