- USD/CAD moves on a downward path as Crude oil prices improve.
- The weekly low at 1.3340 could act as immediate support followed by the psychological level at 1.3300.
- A break above 1.3400 could prompt the pair to approach the 38.2% Fibonacci retracement level at 1.3450 and the 50-day EMA at 1.3454.
USD/CAD retraces its recent gains recorded on Thursday, trading lower near 1.3350 during the European session on Friday. The Canadian Dollar (CAD) is strengthening, influenced by the positive movement in Crude oil prices. This uptick in oil prices is attributed to escalating tensions in the Middle East following military attacks by the US and UK on Iran-backed Houthi locations in Yemen.
The weekly low at 1.3340 is seen as the immediate support for the USD/CAD pair. If this level is breached, it could potentially lead the pair to test the psychological level at 1.3300, with further downside potential towards the major support at the 1.3250 level.
A break below the 1.3250 level could result in the USD/CAD pair navigating the region around the previous week's low at 1.3228, followed by the psychological level at 1.3200.
The technical analysis of the Moving Average Convergence Divergence (MACD) for the USD/CAD pair indicates a potential trend shift, as the MACD line is positioned below the centerline but exhibits divergence above the signal line.
However, the lagging indicator, the 14-day Relative Strength Index (RSI), is positioned below 50. Traders are likely to exercise caution and await confirmation, suggesting that the USD/CAD pair may be on the verge of changing its direction.
The analysis suggests that on the upside, the psychological level at 1.3400 could act as the key resistance. A breakthrough above the key resistance zone could lead the USD/CAD pair to approach the 38.2% Fibonacci retracement level at 1.3450 aligned with the 50-day Exponential Moving Average (EMA) at 1.3454.
USD/CAD: Daily Chart
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