- USD/CAD is marching higher despite upbeat oil prices.
- Stretched consolidation after a downfall is demonstrating signs of inventory accumulation.
- A 40.00-60.00 range oscillation by the RSI (14) indicates a consolidation ahead.
The USD/CAD pair is gradually moving towards the round-level resistance of 1.3400 after a recovery move to near 1.3370 in the Asian session. The Loonie asset is inching higher despite rising oil prices amid optimism about a recovery in Chinese economic prospects.
It seems that rising US Treasury yields have weighed on risk-sensitive assets. The return generated by 10-year US Treasury bonds has climbed above 3.54%. S&P500 futures have resumed their correction, portraying a further drop in investors’ risk appetite. The US Dollar Index (DXY) continues to juggle around 102.00.
A stretched consolidation in USD/CAD for the past two weeks after a healthy sell-off is demonstrating signs of Wyckoff’s inventory accumulation in a 1.3360-1.3460 range. A Spring formation on an hourly scale of around 1.3322 is indicating the presence of responsive buyers, which considered the Loonie asset a ‘value buy’ at lower prices.
The 20-period Exponential Moving Average (EMA) at 1.3392 is overlapping on the USD/CAD price, which indicates a consolidation.
Also, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which adds to the consolidation filters.
Should the asset break above January 12 high at 1.3461, US Dollar bulls will drive the asset towards the psychological resistance at 1.3500 followed by January 6 low at 1.3540.
On the contrary, the Loonie asset will witness weakness if it drops below January 13 low at 1.3322. This will expose the asset for further weakness towards November 18 low at 1.3300 and November 15 low at 1.3226.
USD/CAD hourly chart
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