USD/CAD Price Analysis: Trades within the ascending trend-channel, key contention is seen at 1.3500
|- USD/CAD pair trades within the ascending trend-channel since August 10 on the one-hour chart.
- The immediate resistance level to watch is 1.3550; the key support level is located at 1.3500.
- The Relative Strength Index (RSI) stands above 50, activating the bullish momentum.
The USD/CAD pair gains traction and holds above the 1.3540 area heading into the early European session on Friday. The major pair currently trades around 1.3544, down 0.01% on the day.
That said, the US data strengthen the case for another interest rate rise by the Federal Reserve (Fed). FOMC Minutes emphasized on Wednesday that inflation remained unacceptably high and it may need additional tightening of monetary policy to bring inflation to the longer-run target. This, in turn, boosts the US dollar against its rivals.
Additionally, the safe-haven Greenback attracts some buyers due to the fear of a potential Chinese property catastrophe. According to Reuters, Evergrande, China's second-largest real estate company filed for bankruptcy in a US court under Chapter 15 on Thursday. It should be noted that Evergrande is the world's most indebted property developer and has become the face of China's property crisis.
Technically, the USD/CAD pair trades within the ascending trend-channel since August 10. Further upside for USD/CAD looks favorable as the pair holds above the 50- and 100-hour Exponential Moving Averages (EMAs) with an upward slope on the one-hour chart. Meanwhile, the Relative Strength Index (RSI) stands above 50, activating the bullish momentum for the USD/CAD pair for the time being.
The immediate resistance level for USD/CAD is seen at 1.3550 (High of August 17). The next barrier to watch is the upper boundary of the ascending trend-channel at 1.3570. Any follow-through buying above the latter will see a rally to 1.3600 (a psychological round mark), followed by 1.3640 (High of May 25).
Looking at the downside, 1.3520 is seen as an initial support level for USD/CAD. The critical contention level is located at 1.3500, highlighting the 100-hour EMA, psychological round figure, and the lower limit of the ascending trend-channel. Further south, the next stop to watch is at 1.3475 (Low of August 16) en route to 1.3445 (Low of August 15) and finally at 1.3410 (Low of August 11).
USD/CAD one-hour chart
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