USD/CAD Daily Outlook: Analysis and Market Trend
Source: ActionForex.com
Original Author: ActionForex Analysts
Link: [USD/CAD Daily Outlook – May 14, 2024](https://www.actionforex.com/technical-outlook/usdcad-outlook/605678-usd-cad-daily-outlook-2187/)
Overview
The USD/CAD currency pair continues to show mixed performance as it consolidates its recent gains following a short-term rally. Although the pair has faced resistance, its sideways movement suggests a possible continuation of the prevailing trend. Traders are closely monitoring key support and resistance zones to determine the next directional breakout. In this analysis, we will delve into the current technical setup, important support/resistance levels, potential directional biases, and broader macroeconomic factors influencing the USD/CAD market.
Current Price Action
– The USD/CAD pair is trading within a consolidative structure after a period of upward momentum.
– Despite attempts to break higher, the pair has failed to build sustained bullish strength above short-term resistance levels such as 1.3642.
– The immediate bias remains neutral, with the possibility that a corrective pattern is forming near the top of the current trading range.
Key Technical Levels
Support Levels:
– 1.3593: This is the near-term support. A break beneath this level would suggest that the pair has entered a deeper corrective phase.
– 1.3465: This is the 61.8% Fibonacci retracement level of the upward swing from 1.3176 to 1.3642. A confirmed break below this level would strengthen the bearish outlook.
– 1.3400: Psychological level that also corresponds with previous price consolidation zones.
Resistance Levels:
– 1.3642: Marks the recent high and the upper boundary of the ranging market. A decisive break would resume the larger uptrend.
– 1.3700: Next resistance level in case of a bullish breakout.
– 1.3800: A historically significant level that has acted as resistance multiple times over the past year.
Technical Indicators
– Relative Strength Index (RSI): Currently hovering around the 50 mark, which indicates lack of a clear momentum bias.
– MACD (Moving Average Convergence Divergence): Line is flattening near the zero line, highlighting consolidation and lack of strong divergence.
– Moving Averages:
– 50-day EMA: Positioned around 1.3540 and offering dynamic support.
– 200-day EMA: Located near 1.3450, emphasizing that the long-term trend still leans upward until a definitive breakdown occurs.
Short-Term Bias
– Neutral bias holds as long as the USD/CAD remains confined between 1.3593 and 1.3642.
– A breach below 1.3593 may take the pair toward the 1.3465 support region.
– Alternatively, a successful break above 1.3642 will resume the recent USD strength and could trigger more buying interest toward 1.3744 and beyond.
Medium-Term Outlook
In the medium term, the outlook for USD/CAD remains cautiously bullish, largely driven by relative strength in the US economy and persistent volatility in crude oil prices, which directly impact the Canadian dollar.
– The pair has maintained higher lows since the March 2024 low of 1.3176.
– As long as the pair stays above 1.3378 (50% retracement of the rise from 1.3176 to 1.3641), the structure favors USD bulls.
– Sustained trading above the 200-day EMA reinforces a positive long-term trend outlook.
Fundamental Drivers
1. US Economic Data
Recently released data from the US shows modest growth with inflation remaining above the Federal Reserve’s 2% target.
– Inflation: The latest CPI reading came in at 3.5% YoY, with core inflation holding at
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