**USD/CAD Daily Outlook: Technical Analysis and Market Sentiment**
Originally published on ActionForex.com. All rights reserved to the respective author at Action Forex.
The USD/CAD currency pair demonstrated a mixed performance recently, oscillating between gains and losses as traders waver between economic indicators coming out of the United States and Canada. The pair’s trajectory remains closely tethered to key factors such as interest rate expectations, economic growth data, and, critically, global oil prices. Canada, being a major global exporter of crude oil, sees its currency (the loonie) significantly affected by oil market fluctuations. On the other hand, the U.S. dollar continues to be supported by Federal Reserve hawkishness, although recent data has raised doubts around rate cut timelines.
This analysis delves into the market sentiment surrounding USD/CAD, breaking down key resistance and support levels, fundamental drivers, and what to anticipate in the near term, based on the original analysis by ActionForex.com with added insights from recent economic data.
## Technical Overview
As reported by Action Forex, the current USD/CAD technical structure reflects hesitation in forging a clear directional bias. The pair is currently consolidating within a range and lacks immediate momentum either to breach higher highs or to break supports decisively.
### Key Technical Characteristics:
– **Range-Bound Behavior**: After rebounding sharply on lower timeframes, the pair remains below the 1.3761 resistance mark. The current price action hovers near 1.3660.
– **Support Zone**: 1.3592 provides immediate support. A sustained move below this level could bring deeper pullbacks, possibly testing the 1.3486 area.
– **Resistance Levels**:
– Immediate resistance at 1.3761 (April high).
– A bullish breakout above this level could confirm resumption of the broader uptrend.
– **Indicators**:
– RSI on the daily chart remains around neutral territory, indicating a lack of overbought or oversold conditions.
– Moving averages suggest consolidation dominance. The price is slightly above the 50-day SMA, indicating that bullish momentum is mildly favored, though not strong enough to induce a breakout.
– **Pattern Formation**: No strong reversal or continuation pattern has been confirmed yet. Price action remains corrective in nature.
## Zooming Out: Medium-Term Trend
From a medium-term perspective, USD/CAD continues to operate within a broader uptrend that extends back to mid-2023. However, failure to break above the 1.3800 resistance area has led to multiple pullbacks. The long-term uptrend support line still holds, keeping bullish hopes alive.
– **Uptrend Confirmation Zone**: 1.3846 remains a key structural high. A break above this level would confirm continuation of the 2023–2024 uptrend.
– **Downside Risk**: A break below 1.3400 would neutralize the bullish bias and expose the 1.3225–1.3285 zone where the 200-day SMA resides.
## Fundamental Drivers Affecting USD/CAD
### 1. U.S. Monetary Policy Outlook
The Federal Reserve has played a pivotal role in shaping USD sentiment:
– The latest FOMC meeting minutes displayed a cautious stance towards rate cuts, with inflation remaining sticky, especially in services.
– Recent economic data such as the higher-than-expected May core PCE deflator and strong job reports have reinforced the Fed’s decision to hold rates at elevated levels.
– Fed Funds Futures indicate markets have priced in fewer than two rate cuts in 2024, down from the previous expectation of three to four cuts.
This hawkish Fed tone continues to support USD broad strength, which helps lift USD/CAD in bullish scenarios.
### 2. Canadian Monetary Policy Stance
On the other side, the Bank of Canada (BoC) initiated its first rate cut in June 2024, reducing the overnight rate
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