USD/CAD Price Analysis: Challenges critical daily support line ahead of US NFP

• USD/CAD tracks the dollar price action ahead of the critical US data.
• Falling WTI prices keep the downside checked in the major.
• Bears eye daily closing below the horizontal trendline support at 1.2567.

USD/CAD is nursing Thursday’s heavy losses while wavering near five-week lows of 1.2556, as it tracks the subdued price action in the US dollar across the board.

The dollar is trading listlessly in multi-day lows against its major peers, as traders remain on the sidelines ahead of the all-important US Nonfarm Payrolls data. A lack of momentum around the US Treasury yields is offering little help to the dollar bulls.

Meanwhile, the downside in the pair remains cushioned, courtesy of the renewed weakness in WTI price. The black gold is shedding over 1.50% on the day, currently trading at $114.25. Oil prices are reeling from the OPEC+ decision to ramp up output by 648K barrels this month to help make up for the Russian oil deficit.

From a short-term technical perspective, USD/CAD is testing the crucial daily support line, going back to the April 22 low of 1.2567.

Daily closing below the latter is needed to yield a downside break of the trendline support, which will kick in a fresh downswing towards the 1.2500 level.

The April 21 low of 1.2458 will then come to the rescue of bulls.

The 14-day Relative Strength Index (RSI) is trading listlessly just above the oversold territory, allowing more room for declines.

USD/CAD: Daily chart

On the other side, bulls will need acceptance above 1.2600 to initiate any meaningful recovery.

Further up, a rebound towards the horizontal 200-Daily Moving Average (DMA) at 1.2662.

USD/CAD: Additional levels to consider