The USD/CAD currency pair experienced a decline, trading at approximately 1.4350 during the early session in Europe on Tuesday. The Canadian Dollar, closely tied to commodity prices, is benefiting from a recent surge in crude oil prices, placing upward pressure on the USD/CAD exchange rate. However, expectations surrounding the Federal Reserve’s interest rate policies appear to limit any significant downturn for the pair, with market activity likely to be subdued as the New Year approaches.
The longer-term outlook for USD/CAD remains positive, given that it continues to trade above the critical 100-day Exponential Moving Average (EMA). The momentum indicator, the 14-day Relative Strength Index (RSI), is positioned above the midline at approximately 63.50, indicating that further upward movement may be probable in the near term.
Traders and analysts are monitoring the immediate resistance level at 1.4450, which reflects the peak reached on December 27. A sustained rally beyond this resistance might push the pair towards the next notable level at 1.4517, aligning with the upper boundary of the Bollinger Bands. Should bullish momentum continue, traders will also keep an eye on the 1.4668 level, identified as a significant high from March 16, 2020.
Conversely, initial support for USD/CAD can be noted in the 1.4210 – 1.4200 range, highlighting the low recorded on December 13, as well as a psychological barrier. If the pair were to breach this support, it could potentially open the door to further declines towards 1.4042, in line with the lower limit of the Bollinger Bands. Additionally, the 100-day EMA at 1.3955 emerges as a critical downside indicator should the bearish trend persist.
