During Thursday’s European session, the USD/CAD pair staged a modest recovery, climbing towards the 1.3480 level after experiencing losses in the previous session. The uptick in the US Dollar (USD) was supported by higher US Treasury yields, influenced by recent data reflecting persistent inflationary pressures in the United States (US).
At present, the pair faces immediate resistance near the nine-day Exponential Moving Average (EMA) at 1.3497, a level closely aligned with the psychological barrier of 1.3500. A decisive breach above this pivotal level could pave the way for further upward movement, with the next resistance situated at the significant level of 1.3550. Should bullish momentum persist, attention may turn towards the region around the psychological milestone of 1.3600, coinciding with March’s high of 1.3605.
Conversely, if the USD/CAD pair retreats from current levels, it may find notable support around the major level of 1.3450, followed by the 38.2% Fibonacci retracement level at 1.3442. A breach below these support levels could exert downward pressure on the pair, potentially driving it towards the support zone near the previous week’s low of 1.3419 and the psychological level of 1.3400.
Technical indicators present a mixed outlook for the USD/CAD pair. While the 14-day Relative Strength Index (RSI) remains below 50, indicating bearish momentum, the Moving Average Convergence Divergence (MACD) suggests a potential shift in momentum. Despite the MACD line being above the centerline, signaling bullish momentum, divergence below the signal line prompts caution. Traders may await confirmation from the MACD, a lagging indicator, to ascertain the direction of the prevailing trend.
