**USD/CAD Forex Analysis: Support Testing and Market Outlook**
*By Menafn, Adapted and Expanded by [Your Name]*
The USD/CAD currency pair has recently shown significant directional behavior as it approaches crucial technical support levels. On July 24, 2024, trading action revealed that the pair was navigating a pivotal moment, testing both market fundamentals and technical indicators. The original article from MENAFN provided key insights into price movements and trader sentiment. This expanded version goes deeper into the pair’s recent performances, economic drivers, technical setups, and future projections to provide a comprehensive analysis of USD/CAD, benefiting both day traders and long-term investors alike.
## Overview
The USD/CAD currency pair, representing the US dollar and Canadian dollar, is known for being sensitive to a range of macroeconomic indicators and global events. In July 2024, the pair has experienced rising volatility due to a range of catalysts, including:
– Dovish tone from the US Federal Reserve
– Fluctuations in global oil prices
– Canadian inflation data performance
– US employment and manufacturing reports
– Risk sentiment fluctuations in global equity markets
These factors have collectively pushed USD/CAD into a range-bound yet fragile state where support levels are being tested, suggesting potential breakout or reversal patterns.
## Current Technical Situation: July 24 Snapshot
As per the original article by MENAFN, the USD/CAD pair was trading around the 1.3660 level after testing lower boundaries earlier during the trading session. It is currently forming a consolidation phase following a reversal from higher resistance zones earlier in July.
### Key Technical Indicators
– **Daily Chart Support**:
– The 1.3645 level is acting as a strong support level.
– Price action near this support zone may determine the next movement.
– **Resistance Zone**:
– The 1.3740-1.3760 range remains a heavy resistance area.
– The pair previously failed to break above this resistance despite several attempts.
– **Trend Structure**:
– The pair recently formed a descending triangle pattern with gradually lower highs, which may be bearish if confirmed.
– However, recent price rejections at support signal consolidation rather than a solid breakout.
– **Moving Averages**:
– The 50-day SMA is hovering around the current price, attempting to provide dynamic support.
– The 200-day SMA remains below 1.35, suggesting longer-term bullish support unless the price closes below this threshold.
– **Fibonacci Retracement**:
– Key Fibonacci retracement levels from the May-July uptrend remain intact.
– The 38.2% and 50% retracement zones at 1.3640 and 1.3610 respectively are critical zones for technical traders.
## Fundamental Drivers
To assess the sustainability of price action near the mentioned support, traders are looking at the underlying economic fundamentals of the USD and CAD.
### US Dollar Pressures and Fed Policy
– **FOMC Outlook**:
– The Federal Reserve has maintained cautious rhetoric amidst disinflationary data.
– Slower wage growth and weakening job market indicators in June and July have led analysts to bet on a pause or dovish shift.
– **US Economic Metrics**:
– June non-farm payrolls missed expectations.
– Inflation showed signs of cooling, with CPI now at 3.0% year-over-year, closer to the Fed’s 2% goal.
– The Purchasing Managers’ Index (PMI) in services and manufacturing continues to print below 50, indicating contraction.
These factors have generated downward pressure on the greenback, weakening its advance against commodity-linked currencies like the Canadian dollar.
### Canadian Dollar and Oil Correlation
– **Canadian CPI**:
– The June inflation report showed mixed results, with core CPI still elevated while headline inflation slightly dropped.
– The Bank of Canada
Read more on USD/CAD trading.