- USD/CAD attracts fresh buyers on Wednesday and draws support from a combination of factors.
- Softer Canadian CPI undermines the Loonie and acts as a tailwind amid a modest USD strength.
- The mixed technical setup warrants caution before positioning for a firm near-term direction.
The USD/CAD pair regains positive traction on Wednesday and holds its neck above the 1.3700 round-figure mark through the first half of the European session.
The Canadian Dollar (CAD) is undermined by softer domestic consumer inflation figures released on Tuesday, which now seem to have dashed hopes for any further rate hikes by the Bank of Canada (BoC). The US Dollar (USD), on the other hand, is seen building on the previous day's hawkish FOMC minutes-inspired recovery move from its lowest level since August 31 and acting as a tailwind for the USD/CAD pair. Meanwhile, subdued action around Crude Oil prices does little to provide any meaningful impetus to the commodity-linked Loonie.
From a technical perspective, spot prices, so far, have been showing resilience below the 38.2% Fibonacci retracement level of the September-November rally and finding some support near a two-month-old ascending trend line. The latter is near the 50-day Simple Moving Average (SMA), around the 1.3670-1.3665 region, which should now act as a key pivotal point and determine the near-term trajectory for the USD/CAD pair.
With oscillators on the daily chart starting to gain some negative traction, a convincing break below the 50-day SMA will be seen as a fresh trigger for bearish traders and pave the way for some meaningful downside. The USD/CAD pair might then weaken further below the 50% Fibo. level, around the 1.3640-1.3635 region, and accelerate the slide towards the 1.3600 mark en route to the 1.3580-1.3575 zone, or 61.8% Fibo. level.
On the flip side, any subsequent move-up is likely to confront some resistance near the weekly swing high, around the 1.3750 area ahead of the 1.3775 region, or the 23.6% Fibo. level. Some follow-through buying will negate any near-term negative bias and allow the USD/CAD pair to reclaim the 1.3800 mark. The momentum could get extended further towards the 1.3835-1.3840 supply zone and the YTD peak, near the 1.3900 level.
USD/CAD daily chart
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades at yearly lows below 1.0500 ahead of PMI data
EUR/USD stays on the back foot and trades at its lowest level since October 2023 below 1.0500 early Friday, pressured by persistent USD strength. Investors await Manufacturing and Services PMI surveys from the Eurozone, Germany and the US.
GBP/USD falls to six-month lows below 1.2600, eyes on key data releases
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2600. This downside is attributed to the stronger US Dollar (USD) as traders continue to evaluate the Fed's policy outlook following latest data releases and Fedspeak.
Gold rises toward $2,700, hits two-week top
Gold continues to attract haven flows for the fifth consecutive day and rises toward $2,700. XAU/USD continues to benefit from risk-aversion amid intensifying Russia-Ukraine conflict. Investors keep a close eye on geopolitics while waiting for PMI data releases.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.