- Resurgent USD demand helps USD / CAD quickly recover from the support of an uptrend line.
- Technical indicators on the 1-hour charts favor the bulls and support the prospects for additional gains.
- Neutral oscillators on the daily chart warrant some caution before opening aggressive bull positions.
After showing some resistance below the 1.3100 level, the USD / CAD pair has rallied over 180 pips and has spiked to two-day highs due to a strong rally in demand for the US dollar.
A tighter-than-expected race in the US presidential election has forced investors to hedge their positions and has been seen as a key factor providing a strong boost to the US dollar. The USD / CAD pair has witnessed a sharp intraday turn from support marked by a two-month uptrend line, which should now act as a key point for investors.
Meanwhile, technical indicators on the 1-hour charts have again started to move into positive territory and support prospects for an extension of the current recovery movement. That said, the neutral oscillators on the daily chart have not supported any firm short-term direction, warranting some caution before opening aggressive bullish positions.
Therefore, any subsequent upward movement is likely to face strong resistance near the horizontal zone of 1.3320. This is followed by an obstacle at the downtrend line, currently near the round 1.3400 level, which if decisively overcome will set the stage for a further short-term bullish move. The USD / CAD pair could then aim to test the 1.3450-55 resistance zone.
On the other hand, the round 1.3200 level now seems to defend the immediate drop. If the aforementioned support is not defended, the USD / CAD pair could become vulnerable to accelerate the decline towards the 1.3130-25 region on its way to trend line support. Sustained weakness below the 1.3100-1.3090 region will be seen as a further trigger for the bears.
The downside move has the potential to drag the USD / CAD towards horizontal support at 1.3035 before the bears finally aim to challenge the key psychological level of 1.3000.
USD / CAD daily chart
Credits: Forex Street
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