**USD/CAD Technical Analysis: Upside Momentum Builds Toward 200-Day Moving Average Resistance**
*Original reporting credit: Greg Michalowski, InvestingLive*
The USD/CAD currency pair has been climbing steadily with bullish momentum as market participants eye a critical resistance zone near the 200-day moving average (MA). Traders keeping an eye on this pair have observed a multi-day rally driven in part by a stronger US dollar and oil weakness, which tends to weigh on the Canadian dollar.
This technical update explores the recent price action of the USD/CAD pair, analyzes key resistance and support levels, and delves into macroeconomic catalysts that could influence price direction in the short- to medium-term.
## Recent USD/CAD Price Action Overview
The USD/CAD has seen a notable stretch to the upside over recent trading sessions. Prices have been supported by a combination of positive US economic data, expectations surrounding the Federal Reserve’s monetary policy stance, and subdued performance in the oil market, which often correlates with the value of the Canadian dollar due to Canada’s large oil exports.
As of now:
– The price has moved off a swing low of around 1.3080, a level that held as support in mid-September.
– Upside acceleration has been confirmed by bullish technical patterns and successful breaks above intermediate resistance levels.
– The price is approaching the 200-day MA near 1.35495, a level that technical traders consider an important pivot.
## Key Technical Levels to Watch
To understand the potential next moves for USD/CAD, it’s important to define key support and resistance levels.
### Resistance:
– **200-Day Moving Average (1.35495)**: This is the primary upside target and a key technical milestone. Historically, the 200-day MA acts as a major decision zone for traders, either acting as a resistance or conversion point for longer-term bullish momentum.
– **1.3566 – 1.3570**: A swing high zone from earlier in the year that adds additional overhead resistance right above the 200-day MA.
– **1.3600 Psychological Level**: A round number that often sees a high volume of orders and could act as a psychological barrier.
### Support:
– **1.3476**: This was the prior swing high before the recent rally. If the pair retraces from its current levels, this level could flip into support.
– **1.3430-1.3440 Zone**: Midpoint range support that also aligns with recent short-term moving averages.
– **1.3380**: Near-term support marked by moving average convergence and minor swing lows in late September.
– **1.3310**: A more significant support level below which bearish sentiment could intensify.
## Technical Indicators and Patterns
Several technical indicators support the bullish near-term case for USD/CAD.
– **Moving Averages**: The pair is currently trading above both the 50-day and 100-day MAs, a configuration that suggests an ongoing bullish trend.
– **MACD (Moving Average Convergence Divergence)**: The MACD indicator shows a positive divergence and is crossing higher, supporting continued momentum.
– **RSI (Relative Strength Index)**: The RSI is approaching overbought territory but not quite there yet, indicating there still may be room for upside before markets become overstretched.
## Macro Drivers Behind USD/CAD Movement
Apart from technicals, macroeconomic and geopolitical contexts are significant influencers on USD/CAD pricing.
### Oil Prices
– The Canadian economy is highly tied to commodity exports, particularly oil.
– Lower oil prices have resulted in a weaker CAD, contributing to the recent USD/CAD rally. Brent crude and WTI prices have been under pressure due to rising inventories and concerns over global growth.
– A continued slump in oil prices would apply more downside pressure on the Canadian dollar.
### US Federal Reserve Policy
– Better-than-expected US data has reinforced market expectations that the
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