The USD/CAD currency pair has hit a six-month low, recently falling to 1.3833, which coincides with the lower boundary of its descending channel. Current market indicators reveal that the 14-day Relative Strength Index (RSI) is now in oversold territory, suggesting the possibility of a corrective bounce upwards. The immediate resistance is identified at the nine-day Exponential Moving Average (EMA), situated at 1.4057.
Continuing its downward trajectory, USD/CAD was trading close to 1.3840 during the early hours of trading in Europe on Monday. A closer examination of the daily market chart underscores a dominant bearish sentiment as the pair remains entrenched within its descending channel pattern. The bearish conditions are further emphasized by the 14-day RSI falling below the 30 level, which is typically indicative of oversold market conditions. This development could allow for potential upward corrections in the short term. Additionally, trading below the nine-day EMA signifies a lack of positive momentum in the near term.
On the downside, earlier in the Asian session, USD/CAD reached a new six-month low at 1.3833, aligning with the channel’s lower limit at 1.3810. A breach beneath this descending channel could intensify the bearish outlook, with the potential for the pair to move towards 1.3419, which would represent the lowest level since February 2024.
The primary resistance level lies at the nine-day EMA at 1.4057, followed closely by the upper boundary of the descending channel at 1.4190. Should the pair break above this channel, it could signal the onset of bullish momentum, possibly leading to a test of the 50-day EMA located at 1.4248. Additional resistance is anticipated at a two-month high of 1.4543, last seen on March 4.
