- The US dollar edged higher on Thursday, with USD/CAD attracting some buyers.
- However, the lack of strength at the price point has alarmed bullish investors.
- The bears should wait for a break below the 1.4260 level before placing fresh bets.
The USD/CAD pair is experiencing a modest rise during Thursday’s Asian session, recovering from a two-week low of around 1.4270 seen the previous day. Currently, it trades near the 1.4345 level, up by more than 0.20% on the day, though the upward movement lacks strong bullish momentum.
The US Dollar (USD) is attracting some buyers, putting an end to its three-day losing streak, which had pushed it to its lowest point in over a week. Additionally, the recent decline in Crude Oil prices is weighing on the commodity-linked Canadian Dollar (Loonie), especially in light of the Bank of Canada’s (BoC) dovish outlook, providing support for the USD/CAD pair. However, USD strength is being limited by expectations for further policy easing by the Federal Reserve (Fed), which caps potential gains for the pair.
From a technical standpoint, the USD/CAD found support near the year-to-date (YTD) low of around 1.4260, touched in January. The recent rebound warrants caution among bearish traders. Oscillators on the daily chart are beginning to show negative momentum, indicating the potential for further downside movement. If the pair breaks below the 1.4270-1.4260 range, it may target a move towards the 1.4200 level.
A decisive drop below 1.4200 could extend this week’s sharp retracement from the 1.4800 mark, the highest level since April 2003. In this scenario, the pair could continue its decline towards 1.4170 and eventually 1.4125, heading toward the psychological 1.4100 level.
On the upside, any move above the 1.4355-1.4360 region is likely to face resistance near the 1.4400 level. If this barrier is broken, the USD/CAD could rise further toward 1.4450, moving toward the 1.4500 mark. A sustained move beyond the 1.4535 level would shift the bias toward the bulls, opening the way for the pair to reclaim the 1.4600 level and potentially reach the 1.4665-1.4670 area.
USD/CAD daily chart
