The USDCAD pair has experienced a steady ascent since the close of 2023, following a rebound from the key support level of 1.3175. Currently approaching the short-term 20-day simple moving average (SMA) near 1.3373, the currency pair is navigating below a descending trend line.
Technical indicators, specifically the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI), corroborate the bullish momentum. The MACD remains above its trigger line, while the RSI indicates a slight upward trend, hovering close to the neutral threshold of 50. On the contrary, the stochastic oscillator warns of a potentially overextended market, showing a slight decline just above the 80 level, suggesting a likelihood of a downside correction.
For bulls to attract new buyers, overcoming the immediate resistance posed by the 20-day SMA at 1.3373 and surpassing the 1.3415 barrier is imperative. If achieved, this could propel the price toward the significant descending trend line and the 200-day SMA, situated around 1.3480. Further success could lead to a breach of the 50-day SMA at 1.3570.
However, a downside correction remains plausible in the upcoming sessions. Should the pair dip below the five-month low of 1.3175, potential stabilization near the 1.3150 support may occur. Alternatively, a more pronounced sell-off could unfold, extending towards the 1.3090 territory. The market is delicately poised at a crossroads, with the interplay of technical factors dictating the future trajectory of USDCAD.