The USDCAD currency pair remains within a tight three-week trading range of 1.4350-1.4400, despite a brief spike to 1.4465 on the first trading day of 2025. Here’s a detailed technical analysis of the current price action and potential future movements.
Table of Contents
Technical Indicators Suggest Weakening Momentum
The recent price movement shows signs of weakening buying sentiment:
- MACD Deceleration: The MACD line is slowing beneath its red signal line, indicating a possible loss of upward momentum.
- RSI Retreats from Overbought Zone: The Relative Strength Index has pulled back, suggesting buyers may be losing strength.
Despite these signals, USDCAD appears to be forming a descending triangle pattern at the top of its three-month uptrend. This technical setup often signals a continuation of bullish momentum. Adding to this outlook, the Exponential Moving Averages (EMAs) remain positively sloped, reinforcing upward bias.
Bullish Breakout Requires Key Levels to Be Breached
For a clear bullish confirmation, USDCAD needs to break out of its current range.
- Immediate Resistance Levels:
- A daily close above 1.4400 could pave the way for further upside.
- Sustained movement above the critical resistance zone of 1.4465-1.4500 would strengthen the bullish case.
- Longer-Term Targets:
- The next major target lies at the 2020 high of 1.4667, closely followed by the 2016 peak at 1.4689.
- A successful break above these levels could push the pair toward the psychological 1.4800 barrier, last seen in 2003.
Downside Risks to Watch
If USDCAD fails to maintain its current range, key support levels come into focus:
- Immediate Support Levels:
- A slide below 1.4350 could lead to a quick test of the 20-day EMA at 1.4300 or the support trendline at 1.4260.
- Deeper Correction Zones:
- A break below the 23.6% Fibonacci retracement level at 1.4218 would signal a deeper correction, possibly targeting the 50-day EMA at 1.4125.
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Conclusion: Eyes on Key Resistance and Support Levels
USDCAD remains in a critical phase, with the potential for significant upside if bullish signals strengthen. Traders should watch for a decisive breakout above 1.4400 or a break below 1.4350 for clearer direction.
This technical setup positions USDCAD as a pair to watch in the early weeks of 2025, with both bulls and bears eyeing pivotal price levels.
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