The Canadian dollar is the best performing major currency so far this week

CAD leads gains on the week so far, with the dollar and yen lagging behind

Trade talks to secure a NAFTA deal are showing good signs of progress and that is providing a solid tailwind for the Canadian dollar to move higher this week. Today, the loonie got another shot in the arm and USD/CAD moved lower by about 20 pips to start off to lows of 1.2904 on the day.

The slight retracement in overnight trading sees price stall around the 50.0 retracement level @ 1.2935 of the swing move lower yesterday and the news earlier this morning is only helping to fuel the rally by sellers to start the week.

Right now, the 1.2900 level will provide some support but there is no doubting that the near-term bias continues to favour sellers for the time being.

Daily support is seen at 1.2928 from the 50.0 retracement level of the larger move lower in 2017. While there is also additional support from the swing high region back in October to December 2017 from 1.2900 to 1.2917. Ultimately, the figure level is where sellers will need to break below to push for the next leg lower.

After 1.2900, the 200-day MA (blue line) @ 1.2843 will be eyed.

But that is not the only key support level at play currently:

The weekly chart also highlights that price is moving away from the trendline support and is breaking below the 100-week MA (red line). At the moment, sellers are testing a move below the 200-week MA (blue line) @ 1.2915 so that will be one to watch out for when we approach Friday trading.

In terms of trading the pair, headline risk is everything right now and the reaction by the loonie will be highly sensitive. You can use technical levels to define and limit your risk but it's not a time to cry over spilt milk if headlines swing price one way and then back the other in the same day. That's the risk when it comes to trading a currency in a time like this.

Bias may favour sellers for the time being, but just remember that headlines can easily turn things on its head.

Support

- 1.2900-15 (swing region, 200-week MA)

- 1.2888 (yesterday's low)

- 1.2860 (6 June low)

- 1.2843 (200-day MA)

- 1.2800-20 (swing region)

Resistance

- 1.2935 (50.0 retracement level on H1)

- 1.2960 (swing region)

- 1.2980 (100-week MA)

- 1.2998-3009 (100-day MA, 100-hour MA)