On Friday, the USD to CAD exchange rate climbed for the second consecutive day. During the first half of today’s European trading session, it rose to around the 1.3675 level. The increase indicates robust underlying demand for USD purchasing. This underscores the continuing struggle between bullish and bearish market forces. Recent volatility aside, the pair has been relatively resilient, bouncing in a wider trading band for the last two months.
The recent price action on the USD/CAD pair was difficult to decipher, as on Wednesday the pair fell to a three week low around the 1.3575 area. Of course, this pair appears to have considerable downside risk protection. Important support levels are the 1.3650 figure and the 1.3600-1.3590 area. Such levels are extremely important to traders as they serve as a cushion against continued downward pressure.
On the topside, the monthly swing high for the USD/CAD pair is located in the 1.3775 area. Most analysts agree that a strong, clear break above this level would indicate we have indeed broken out from the current trading range. This change can create new opportunities for rising. Should the pair break above the 1.3700 figure, new bearish traders may enter the market. This indicates that traders are feeling conflicted sentiment.
Recent market dynamics have resulted in a cap near the 1.3755 horizontal zone, suggesting that bullish momentum may face challenges in sustaining itself. Further selling pressure below the 1.3575 level could see the USD/CAD pair eventually falling to the 1.3520 and 1.3470 lower levels. It may test the 1.3540 zone and then test the key psychological level of 1.3500.
The undercurrents of pricing the USD/CAD duo dance in step with the ebb and flow of the global machination of USD pricing. That trend of pricing continues to affect it today. On the street, every market participant is watching both U.S. Additionally, shifts in USD strength often elicit moves in the CAD.