- USD/CAD reaches its highest level since January and is supported by a combination of factors.
- Falling crude oil prices weaken the Loonie and provide a nice boost amid sustained USD buying.
- The overbought RSI on the hourly chart does not help bulls find acceptance above the 100-day SMA.
The pair USD/CAD is supported by this week’s nice bounce from near the monthly low and gets strong follow-through traction on Friday. The boost raised the price to the 1.3535-1.3540 zone, the highest level since January 6, and is supported by a combination of factors.
Crude oil prices fall to a week-and-a-half low on fears that rising financing costs will slow down economic growth and affect fuel demand. This, in turn, undermines the commodity-linked Loonie, which, coupled with the relentless buying of US dollars, acts as a tailwind for the USD/CAD pair.
From a technical point of view, the overnight strength above 1.3400, which represents the upper end of a descending channel of more than two months, was seen as a new trigger for the bulls. A subsequent move above the 50-day SMA supports the prospects for further appreciation.
Spot, however, prices are struggling to find acceptance above the 100-day SMA amid the overbought RSI (14) on the hourly charts. Therefore, it will be prudent to wait for a convincing break through said barrier, currently around the 1.3520 region, before placing new bulls around the USD/CAD pair.
The ensuing positive momentum should allow bulls to clear an intermediate barrier near the 1.3570 zone and aim to recapture the 1.3600 signal. The bullish trajectory could extend further to retest the all-year high around the 1.3680-1.3685 region touched in January.
On the other hand, any further pullback below the breakout point of the 1.3475-1.3470 horizontal resistance, which coincides with the 50-day SMA, could be considered a buying opportunity and remain capped near the 1 signal. ,3400. The latter should act as a solid base for the USD/CAD pair, which if broken could nullify the positive outlook.
USD/CAD daily chart
Key levels to watch
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.
