- USD/CAD trades near 1.3975, approaching the 50-day EMA at 1.4030.
- Daily RSI holds above 52, price structure points to potential breakout.
- 4-hour chart shows higher lows, support holds at 50-period EMA near 1.3900.
The USD/CAD pair is exhibiting resilience near the 1.3975 level during Wednesday’s American trading session, as bullish investors attempt to reassert dominance following a notable rebound from the 1.3900 area earlier in the day. The prevailing price action observed on the daily chart suggests a constructive outlook, with the currency pair currently challenging the 50-day Exponential Moving Average (EMA), situated at 1.4030. This level represents a key dynamic resistance zone that could dictate the short-term trajectory of the pair. Market participants are closely watching this level, as a successful breach could signal further upside potential.
The daily technical structure shifted to a bullish bias after the USD/CAD closed above the 21-day EMA, currently positioned at 1.3920, earlier in the week. A sustained break and subsequent close above the 50-day EMA would serve as confirmation of a breakout from the recent consolidation phase, potentially paving the way for the next upside targets at 1.4150 and then 1.4290, levels that approximate the highs observed in April. The Relative Strength Index (RSI) on the daily chart is currently holding at 52, indicating a moderately bullish sentiment without yet reaching overbought territory. This suggests that there may be room for further upward movement before the pair becomes technically overextended. Traders are also monitoring broader market sentiment, including movements in crude oil prices, a key export for Canada, which can significantly influence the CAD.
Conversely, the 1.3900 level remains a crucial pivot point, aligning with the neckline of the recent consolidation base. A decisive break below this level could trigger renewed selling pressure, potentially dragging the pair back towards the April lows in the vicinity of 1.3750. This downside scenario would likely be exacerbated by any strengthening of the US dollar due to shifts in expectations regarding Federal Reserve policy. Investors should also pay attention to upcoming economic data releases from both the US and Canada, as these could introduce volatility and impact the USD/CAD exchange rate. Specifically, any surprises in inflation figures or employment data could prompt significant market reactions.
