The USD/CAD pair has seen a goodish rebound this week, climbing to its highest level since January 6 and drawing support from a combination of factors. Sliding crude oil prices have undermined the Loonie, providing a goodish lift amid sustained US Dollar buying. Despite the overbought RSI on hourly charts failing to assist bulls to find acceptance above the 100-day SMA, the pair has managed to break through the top end of an over two-month-old descending channel, represented by the 1.3400 mark.
This has allowed bulls to surpass an intermediate barrier near the 1.3570 area and aim to reclaim the 1.3600 round-figure mark. The subsequent positive momentum could extend further towards retesting the YTD peak, around the 1.3680-1.3685 region touched in January. However, any pullback below the 1.3475-1.3470 horizontal resistance breakpoint, coinciding with the 50-day SMA, could be seen as a buying opportunity and remain limited near the 1.3400 mark. This should act as a strong base for the USD/CAD pair, which if broken might negate the positive outlook.
The daily chart of the USD/CAD pair shows that the pair has been in a strong uptrend since the beginning of the year, with a few sharp declines along the way. The pair has managed to break through the 1.3400 mark, representing the top end of an over two-month-old descending channel, and bulls have been able to push the pair above the 50-day SMA. The next major resistance comes at the 1.3570 area, which could provide a strong resistance to the pair if it fails to break through.
The overbought RSI on hourly charts, however, could prove to be a stumbling block for the pair as it attempts to break through the 100-day SMA. If the pair manages to break through the 100-day SMA, it could open up the possibility of further gains towards the 1.3600 mark. On the other hand, if the pair fails to break through the 100-day SMA, it could pull back towards the 1.3475-1.3470 horizontal resistance breakpoint.
In conclusion, the USD/CAD pair has seen a strong rebound this week and is currently trading at its highest levels since January 6. The pair has managed to break through the 1.3400 mark, representing the top end of an over two-month-old descending channel, and bulls have been able to push the pair above the 50-day SMA. However, the overbought RSI on hourly charts could prove to be a stumbling block for the pair as it attempts to break through the 100-day SMA. If the pair manages to break through the 100-day SMA, it could open up the possibility of further gains towards the 1.3600 mark. On the other hand, if the pair fails to break through the 100-day SMA, it could pull back towards the 1.3475-1.3470 horizontal resistance breakpoint.