USD/CAD bulls roar back, eyes on 1.3700 [Video]

USDCAD treats its wounds with solid bounce.

Christina Parthenidou XM

Caution needed as familiar resistance nearby.

USDCAD gathered significant momentum on Thursday, flipping weekly losses into a 0.20% gain after a slightly stronger US CPI report.

The pair kept its footing above its simple moving averages (SMAs), but the descending trendline from the 2020 top resumed its resistance role, halting the bullish action marginally below 1.3700. Despite some positive signs coming from the RSI and the stochastic oscillator, the bulls need to break through that threshold to move towards the 2023 wall of 1.3800-1.3860. The 2022 peak of 1.3276 could be the next destination.

On the downside, the 20- and 50-day SMAs could hold the market above the short-term support trendline drawn from July near 1.3500. Note that the 200-day SMA is flattening in the same region. Hence, a step lower could trigger another negative correction towards the support line from November at 1.3390. Failure to bounce there could squeeze the price into the 1.3245-1.3290 zone, where the upper band of the broker bearish channel intersects the 2021 ascending trendline.

In brief, the recent solid rise in USDCAD looks appealing, but it may not last if it can't run sustainably above 1.3700.

Author

Christina Parthenidou

Christina joined the XM investment research department in May 2017. She holds a master degree in Economics and Business from the Erasmus University Rotterdam with a specialization in International economics.

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