**USD/CAD Weekly Technical Outlook and Broader Market Analysis**
*Adapted from the original analysis by ActionForex.com, with additional insights incorporated for a comprehensive view.*
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**Overview:**
The USD/CAD pair showed notable fluctuations during the past trading week. After testing critical support levels, it rebounded decisively towards the end of the week, indicating possible stabilization in favor of the US dollar. However, the broader trend remains uncertain as momentum indicators show mixed signals. This article provides a detailed overview of USD/CAD performance, key technical support/resistance levels, macroeconomic factors impacting the currency pair, and potential outlooks for traders.
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**Price Action Summary:**
Last week, USD/CAD began on a weaker note, dropping below the 1.3600 handle. Mid-week saw further decline, testing support near 1.3600, before staging a rebound by Friday, closing near 1.3740. Although the pair showed resilience, it remains trapped within a mid-term consolidation range, keeping immediate trend direction ambiguous.
**Key Observations:**
– USD/CAD tested multi-week support around the 1.3600 area, aligning with 55-day Exponential Moving Average (EMA), which acted as dynamic support.
– Price rebounded sharply, suggesting bulls are still active around major support areas.
– Despite the bounce, the pair has yet to break decisively above key resistance to confirm trend continuation.
– Momentum indicators, including RSI, are showing signs of exhaustion near overbought territory.
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**Technical Indicators and Trend Analysis:**
The medium-term picture for USD/CAD remains moderately bullish. However, the pair is experiencing resistance in the 1.3780–1.3800 range, which aligns with May’s swing highs and prior rejection points. For trend confirmation, a breakout beyond this range is crucial.
*Bullish Indicators:*
– Price finds consistent support around 100-day Simple Moving Average (SMA) at 1.3580–1.3600.
– The RSI indicator has rebounded from a neutral zone, climbing back toward bullish territory (above 50).
– MACD histogram on the daily chart shows weakening bearish momentum, potentially shifting toward bullish crossover.
*Bearish Concerns:*
– Failure to break past 1.3800 leaves USD/CAD vulnerable to a deeper retracement.
– RSI divergence remains a concern on higher timeframes, suggesting waning bullish pressure.
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**Key Support and Resistance Levels:**
_Immediate Resistance:_
– 1.3785: Horizontal resistance tested twice in May.
– 1.3840: Key psychological level and upper trendline resistance from a rising channel.
– 1.3900: March swing high. Break above could open a run toward 1.4000.
_Support Levels:_
– 1.3600: Critical support aligned with the 55-day EMA.
– 1.3540: Minor support from April swing lows.
– 1.3480: Key pivot level from March’s range.
If the pair decisively breaks below 1.3540, it may signal a reversal in the medium-term bullish trend. Conversely, a strong break above 1.3850 would favor resumption of the uptrend.
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**Fundamental Backdrop:**
To better understand where USD/CAD stands technically and fundamentally, a review of global macroeconomic and geopolitical situations is necessary.
1. **U.S. Dollar Outlook:**
– The US dollar continues to find support due to sticky inflation and stronger-than-expected economic indicators.
– Recent speech from Fed Chair Jerome Powell reiterated the need for more evidence before rate cuts, keeping markets cautious.
– Underlying hawkish tones and robust jobs data provided strength to the greenback.
2. **Bank of Canada (BoC) Policy:**
– The BoC has taken a relatively dovish stance amid signs of moderating inflation and slowing economic activity.
Read more on USD/CAD trading.