**USD/CAD Price Forecast: Currency Pair Nears Upper Boundary of Rectangular Range at 1.3800 Level**
*By: FXStreet (original author), rewritten and expanded by AI*
The USD/CAD currency pair has seen upward momentum in recent trading sessions, bringing it close to the upper boundary of a well-defined rectangular consolidation range. This resistance level, situated near the psychological 1.3800 mark, comes into focus as traders weigh multiple technical and fundamental factors influencing the pair’s trajectory. The price movement suggests that USD/CAD is testing a critical level, and its ability to break out or get rejected here could shape the market’s direction over the coming days and weeks.
This article delves into the current technical structure of the USD/CAD pair, broader macroeconomic factors influencing price action, and the potential near-term forecast based on both technical indicators and upcoming economic data. All original analysis is credited to FXStreet, and further insights have been added from multiple reputable sources.
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### Technical Analysis Summary
USD/CAD is currently confined within a horizontal price range seen as a rectangle on the daily chart. This consolidation pattern has defined strong support and resistance levels for weeks.
– **Resistance Zone:** 1.3800 marks the upper boundary of the rectangle. A break above this level could pave the way for further bullish momentum.
– **Support Zone:** The lower end of the rectangle sits near 1.3600, acting as a reliable floor for several past pullbacks.
– **Current Price Action:** As of the most recent trading session, USD/CAD is hovering just below 1.3800, suggesting a potential breakout attempt may be underway.
The pair has gained strength predominantly on the back of a stronger US dollar and volatility in oil prices, which directly impacts the Canadian dollar due to its resource-driven economy.
#### Key Technical Indicators
– **Relative Strength Index (RSI):** The RSI on the daily chart stands near 65-70, which is near the overbought threshold. This suggests bullish momentum is strong, but some caution is warranted as markets approach resistance.
– **Moving Averages:**
– The 50-day and 200-day exponential moving averages (EMAs) remain below the current price, confirming a longer-term uptrend.
– **MACD Indicator:** The MACD line remains above the signal line, and both are in positive territory, supporting continued bullish movement.
– **Fibonacci Levels:** When applying a Fibonacci retracement from the recent low near 1.3400 to the high at 1.3800, the mid-level at 1.3600 aligns closely with the rectangle’s lower band, offering additional technical confluence.
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### USD/CAD Price Behavior: Range and Momentum
Over the last few months, USD/CAD has seen multiple attempts to breach the psychological 1.3800 level. Each attempt has resulted in a rejection or a minor pullback. The price volatility within this range has created valid trade opportunities for short-term and swing traders.
#### Price Pattern Insights
– The rectangular price pattern is typically viewed as a period of continuation or consolidation before the next major move.
– A breakout above the 1.3800 resistance could lead to a measured move that targets 1.4000 or higher based on the height of the rectangle.
– Conversely, a rejection at 1.3800 could see a retest of 1.3650 and possibly the lower bounds near 1.3600.
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### Fundamental Drivers Supporting USD/CAD
The USD/CAD exchange rate continues to be influenced by divergence in monetary policy outlooks and commodity price volatility, especially crude oil, which has a historically strong correlation with the Canadian dollar.
#### Key Fundamental Factors:
– **Federal Reserve Policy:** Recent economic data, including resilient U.S. labor reports and sticky core inflation numbers, have led markets to push out expectations for Federal Reserve rate cuts. Fed officials remain cautiously hawkish, which
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