- USD/CAD gains some positive traction on Thursday and gets support from a modest USD rally.
- Bullish crude oil prices benefit CAD and limit the pair’s upside ahead of US PCE.
- The recent breakout of key barriers and positive oscillators on the daily chart favor the bulls.
The USD/CAD pair attracts some buying on Thursday and appears to have halted a two-day corrective slide from a nearly three-month high for now, around the 1.3635-1.3640 zone touched last week. The pair maintains the modest intraday gains during the European session, although it lacks continuation and remains below 1.3550.
The US dollar (USD) recovers from the important 200-day simple moving average (SMA) and breaks a three-day losing streak to a two-week low, which in turn acts as a tailwind for the USD/USD pair. EXP. That said, the weaker US macro data on Wednesday reaffirms expectations that the Federal Reserve (Fed) is nearing the end of its rate hike cycle and restraining the Dollar.
In addition, crude oil prices remain near the highest level in more than two weeks and benefit the CAD, a currency linked to commodity prices. This helps limit the rise of the USD/CAD pair. Traders are also refraining from taking aggressive positions, preferring to wait for the release of the US core PCE price index – the Fed’s preferred inflation gauge – later in the American session.
From a technical point of view, the recent sustained breakout of the 200-day SMA and subsequent breach of the psychological level of 1.3500 was seen as a new trigger for USD/CAD bulls. Elsewhere, the Relative Strength Index (RSI) on the daily chart has eased from overbought territory and supports the prospects for some buying at lower levels, which should help limit the downside.
However, if the selling occurs below the 1.3500 level, the 1.3460-1.3455 zone (200-day SMA) could be vulnerable. The pair could accelerate the decline towards the next relevant support, near the 1.3400 round level, on the way to the 1.3370 region.
On the other hand, the previous day’s high around the 1.3575 zone now seems to act as an immediate hurdle ahead of the round 1.3600 level. If it continues to rise, it is likely to face resistance near the monthly high, around the 1.3635-1.3640 zone, above which the USD/CAD pair could try to recover the 1.3700 level and continue to rise towards the zone. resistance of 1.3740-1.3745. Momentum could extend further towards the round 1.3800 level en route to the yearly high, around the 1.3860 area touched in March.
USD/CAD daily chart
USD/CAD additional technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
