The USD/CAD pair continues its upward trajectory, reaching around 1.3550 in early European trading on Thursday. The US Dollar (USD) has found support following the Federal Reserve’s (Fed) unanimous decision to maintain the benchmark Federal Funds Rate at 5.25% to 5.5% for the fourth consecutive month. Additionally, declining oil prices are exerting downward pressure on the commodity-linked Canadian Dollar (CAD), providing further momentum for the USD/CAD pair.
Analyzing the four-hour chart, USD/CAD is poised to surpass the 50- and 100-period Exponential Moving Averages (EMA), indicating a potential resumption of the uptrend upon a decisive breach of this level. The Relative Strength Index (RSI) returning to bullish territory above the 50-midline supports the current buying momentum.
The immediate resistance for the pair is identified at the upper boundary of the Bollinger Band at 1.3460. A sustained move above this level could trigger a rally towards the psychological round figure of 1.3500, with further resistance at the January 25 high of 1.3535.
Conversely, initial support lies at the January 30 low of 1.3395. A bearish breakout below the lower limit of the Bollinger Band at 1.3378 may lead to a decline to the January 31 low at 1.3358, followed by the key round figure of 1.3300 and the January 2 low at 1.3228. Traders are advised to monitor these levels for potential shifts in market dynamics.