The USD/CAD exchange rate made a notable recovery on Thursday, climbing to approximately 1.4355 during the early European trading session after enduring three consecutive days of declines. This rebound can be attributed to a renewed demand for the US Dollar, which is providing essential support to the currency pair. However, the rise in crude oil prices is a key factor that may strengthen the Canadian Dollar, potentially limiting further gains for USD/CAD.
Analysis of the four-hour timeframe suggests that the bearish trend for USD/CAD is still evident, particularly as the pair remains positioned below the crucial 100-period Exponential Moving Average (EMA). A strong movement above this threshold could signal a reversal in trend and allow for an upward trajectory. Meanwhile, the Relative Strength Index (RSI) is hovering near 45.80, a sign that suggests the possibility of continued downward pressure in the near term should current trends persist.
The immediate support level for USD/CAD stands at 1.4322, which corresponds to its recent low. A breach below this level could lead to further declines, targeting 1.4300, which aligns with both the lower boundary of the Bollinger Band and a significant psychological threshold. Additionally, the next critical support to monitor is at 1.4279, marking the lowest point recorded on January 6.
Conversely, if the USD/CAD rate maintains trading above the key 100-period EMA, it could potentially rally towards the 1.4400 – 1.4410 range. This area not only reflects a significant round number but also aligns with recent highs. Should the currency pair proceed further, the subsequent resistance to anticipate will be at 1.4442, situated at the upper boundary of the Bollinger Band.
