USD/CAD is consolidating near a potential support zone!
I don’t know if you’ve been watching USD/CAD but you should know that the pair hasn’t quite recovered from its rejection just under the 1.3600 mark last week. If you recall, the U.S. dollar lost pips likely due to improved risk sentiment and traders taking profits from their long USD trades.
Meanwhile, the oil-related Canadian dollar was able to limit its losses and even gain some pips thanks to higher crude oil prices.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the U.S. and Canadian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
USD/CAD 4-hour Forex Chart by TradingView
Let’s see if USD will continue to give up pips to its “riskier” counterparts and if CAD can continue to take advantage of higher oil prices.
USD/CAD is trading near the 1.3500 psychological handle, which is right around the Pivot Point line and the 100 and 200 SMAs in the 4-hour time frame.
More importantly, the pair’s current levels are near an ascending channel support that’s been around since the start of the year.
Will the consolidation lead to USD/CAD extending its 2024 uptrend? Or are USD bears just gearing up for a downside breakout?
A bounce from the SMAs and trend line support could set USD/CAD up for a potential retest of the 1.3600 area. And, if there’s a fundamental catalyst to back an upswing, we could also see USD/CAD make new 2024 highs in the next couple of days.
But consolidations can break in either direction so, while the technical odds are stacked for a possible uptrend extension, y’all should also be prepared for a possible breakout.
Watch how USD/CAD reacts to the channel support area. Bearish candlesticks and consistent trading below the 1.3450 zone, for example, could lead to bears pouncing and dragging USD/CAD to the 1.3350 previous support levels.