The USD/CAD currency pair has given up its recent gains from the previous session, currently trading around 1.4180 during the Asian trading hours on Wednesday. The technical outlook on the daily chart highlights a potential breakout from a falling wedge pattern, a bullish chart formation that could signal an impending upside movement if the price breaks above the pattern’s upper boundary.
Despite the falling wedge’s bullish implications, the 14-day Relative Strength Index (RSI) remains above the 30 threshold, confirming a prevailing bearish sentiment. However, should the RSI dip below the 30 level, it could suggest that the USD/CAD pair is entering oversold territory. This would signal the potential for an upward correction in the near future.
Bearish Sentiment Persists as USD/CAD Stays Below Key EMAs
A closer look at the USD/CAD pair reveals that it continues to trade below the nine- and 14-day Exponential Moving Averages (EMAs), reinforcing the bearish trend. This positioning indicates that the short-term price action remains weak, and selling pressure is likely to persist.
Looking at the downside, immediate support is seen near the lower boundary of the falling wedge, coinciding with the psychological level of 1.4100. A breakdown below this support level could reinforce the bearish outlook, sending the USD/CAD pair towards the three-month low of 1.3927, which was last reached on November 25. Traders should keep a close eye on this critical level for signs of further downside momentum.
Resistance Levels to Watch for USD/CAD
On the other hand, the USD/CAD pair may face immediate resistance at the nine-day EMA near 1.4230, which also aligns with the upper boundary of the falling wedge. A breakout above this resistance could signal a shift in sentiment, paving the way for a potential bullish reversal. The next significant hurdle is found at the 14-day EMA around 1.4263. If the pair manages to break above this key resistance zone, it could gain enough momentum to push toward the psychological level of 1.4300.
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USD/CAD’s Intraday Performance
In terms of intraday movements, the USD/CAD pair shows a slight decline, with the Canadian Dollar underperforming relative to other major currencies. As seen in the table below, the Canadian Dollar has been the weakest against the New Zealand Dollar (NZD).
| Currency Pair | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | -0.09% | -0.18% | -0.05% | -0.19% | -0.31% | -0.03% | |
| EUR | 0.05% | -0.04% | -0.11% | -0.01% | -0.15% | -0.26% | 0.01% | |
| GBP | 0.09% | 0.04% | -0.10% | 0.05% | -0.11% | -0.22% | 0.05% | |
| JPY | 0.18% | 0.11% | 0.10% | 0.11% | -0.03% | -0.16% | 0.12% | |
| CAD | 0.05% | 0.00% | -0.05% | -0.11% | – | -0.14% | -0.27% | |
| AUD | 0.19% | 0.15% | 0.11% | 0.03% | 0.14% | -0.12% | 0.16% | |
| NZD | 0.31% | 0.26% | 0.22% | 0.16% | 0.27% | 0.12% | – | |
| CHF | 0.03% | -0.01% | -0.05% | -0.12% | -0.01% | -0.16% | -0.28% |
This data reflects the Canadian Dollar’s performance across multiple currency pairs.
Conclusion: Monitoring USD/CAD for Key Breakout Levels
The USD/CAD pair is at a critical juncture. While the falling wedge pattern hints at a possible bullish breakout, the pair must overcome immediate resistance levels at 1.4230 and 1.4263 to change the prevailing bearish momentum. On the other hand, the pair’s sustained weakness below the nine- and 14-day EMAs suggests that further downside risks are present. Traders should watch the 1.4100 support level closely, as a break below it could lead to a deeper decline towards 1.3927.
Ultimately, whether the USD/CAD pair continues its bearish trend or embarks on a bullish reversal hinges on these critical technical levels.
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