The USD/CAD currency pair is bouncing back slightly for the third consecutive day. It has continued the uptick today, recently making a move to the 1.3725-1.3730 range, a near top-side one-week high. This rallying trend has drawn in buyers thanks to the continuing backdrop of mild U.S. dollar strength. As traders watch important technical levels, the currency pair’s recent behavior is making market participants wonder what happens next.
The USD/CAD pair has rocketed skyward in the past few months. This increase is due to a correction in the U.S. dollar paired with tactical buying by investors. Now, the duo is testing the 50% Fibonacci retracement and making it juncture all the more technically relevant. Traders continue to keep a close eye on the pair as it dances around this key psychological level.
A crucial support level for the USD/CAD pair lies at the 1.3700 mark. Analysts note that if the pair fails to maintain its position above this level, it may encounter additional support near the 1.3670 horizontal zone. Looking closer … This zone is important since it comes before the 1.3635 area, which is the year-to-date low for the currency pair.
With the USD/CAD on an upward path, it is met with resistance at the 1.3735-1.3740 area hurdle. A move through this degree could be about to ignite some profit-taking on the part of short-sellers flat-footed in the pair, vaulting the pair higher. If analysts can ultimately break this resistance, they expect the USD/CAD to surge into the 1.3780 area. This level coincides with the 38.2% Fibonacci retracement level.
Traders are closely monitoring the potential for further gains. Should the USD/CAD pair break above the abovementioned resistance, it might target up to the 1.3800 level. Beyond that, its next targets would be the supply zone between 1.3825 and 1.3830. The USD/CAD pair can expect a major drop should it defeat its current support levels dismally.
We will have to watch if the price drops below that important 1.3600 region – which might induce further steep declines. This would most probably take us in the direction of the 1.3545 region, near the psychological 1.3500 figure. The risk for these types of declines makes it essential to monitor both resistance and support in today’s market climate.
Technical indicators on the daily chart are currently displaying negative territory, prompting concerns among bullish traders of USD/CAD. Speculators and investors alike are optimistic about a return to bullish conditions market-wide. They need to continue to be careful as they move through these active circumstances.