- The USD/CAD pair is positioned for a potential retest of the 1.3781 level, representing a six-month low.
- Currently, the pair is navigating the key psychological threshold of 1.3800, with the six-month low of 1.3781 serving as the next significant support level.
- A successful breach of the nine-day EMA at 1.3845 could bolster short-term bullish momentum.
The USD/CAD pair is currently giving back some of the gains it secured in the previous trading session, hovering around the 1.3810 mark in early European trading hours on Friday. However, technical analysis of the daily chart suggests a possible shift toward a more bullish market sentiment, as the pair makes an attempt to break free from the prevailing descending channel pattern. Investors are closely watching key economic indicators from both the US and Canada, including upcoming inflation data and employment figures, which could significantly influence the pair’s trajectory.
Furthermore, the 14-day Relative Strength Index (RSI) remains above the 30 level, signaling the persistence of a bearish inclination, although the pair is not yet in oversold conditions. Continued observation of price movements will be crucial in determining a more definitive trend direction. The USD/CAD pair’s continued trading below the nine-day Exponential Moving Average (EMA) also indicates a lack of strong short-term upward momentum. Market participants are also factoring in the potential impact of central bank policies, with both the Federal Reserve and the Bank of Canada closely monitoring economic data to guide their future interest rate decisions.
On the downside, the USD/CAD pair is currently testing the psychological level of 1.3800, followed by the six-month low of 1.3781, a level last observed on April 21, which coincides with the upper boundary of the descending channel. A definitive return to trading within the channel would reinforce the bearish outlook and exert downward pressure on the pair, potentially pushing it toward the region around 1.3419 – its lowest level since February 2024. Further support is anticipated around the lower boundary of the descending channel, near the 1.3350 area. Traders should also be aware of potential volatility stemming from geopolitical events and shifts in global risk sentiment, which could introduce unexpected fluctuations in the currency pair.
