**USD/CAD Forex Technical Analysis: Risk Events and Key Support Zones in Focus**
*Original article credit: MENAFN.com*
The USD/CAD currency pair has recently drawn the attention of traders due to its testing of significant support levels amid a fluctuating macroeconomic environment. As the foreign exchange market navigates through a period of volatility driven by shifting interest rate expectations, commodity prices, and geopolitical tension, the USD/CAD cross remains one of the more reactive major pairs for both intraday and swing traders.
This article takes a comprehensive look at the recent movements of USD/CAD as the pair approaches a crucial support level, evaluates the macroeconomic drivers influencing the price action, and outlines potential technical setups and trading strategies. Additional research from trusted forex news sources and technical tools has been included to provide a full picture.
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### Current Overview
As of late July 2024, USD/CAD has been testing the 1.3670-1.3680 support area—a level that previously acted as resistance before being broken in mid-June. This flip of resistance to support is a classic technical development and may serve as a base for further upward movement if the area holds.
Recent price action suggests weakening bullish momentum as the pair struggles to break higher highs on the daily chart. However, strong economic data from the United States along with weaker oil prices could help keep USD/CAD supported in the medium term.
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### Key Technical Levels
#### Support:
– **1.3670-1.3680 zone**: This support zone has been tested several times in recent sessions. A break below this level could lead to a visit to 1.3600, followed by the 1.3540 low from early July.
– **1.3600**: A minor psychological level and past resistance now acting as potential support.
– **1.3540**: A multi-week low; a break below might suggest a trend reversal.
#### Resistance:
– **1.3740**: Recent swing high and intraday resistance.
– **1.3800**: A round-number resistance aligned with the 100-day moving average.
– **1.3860**: Multi-month high reached in June; breaking above would reignite bullish sentiment.
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### Technical Indicators
Several indicators have been flashing warning signs about the strength of the recent uptrend:
– **Relative Strength Index (RSI)**: Currently hovering around the neutral 50 mark on the 4-hour and daily timeframes. This suggests indecision in market direction. An RSI below 40 would indicate growing bearish momentum.
– **Moving Averages**: The 50-day and 100-day simple moving averages are providing dynamic resistance above the current price. Price action remains relatively above the 200-day MA, suggesting the longer-term trend still leans bullish.
– **MACD (Moving Average Convergence Divergence)**: The MACD line is flattening out and close to a bearish crossover. This adds further caution to long trades.
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### Macro and Fundamental Drivers
The USD/CAD pair is highly sensitive to both Canadian and U.S. economic indicators. Several recent macroeconomic updates are influencing price direction:
#### 1. U.S. Economic Data
– **CPI and PPI figures**: Recent inflation numbers in the U.S. have come in near expectations, with Federal Reserve Chair Jerome Powell maintaining a cautious stance on future rate cuts.
– **Labor Market**: Employment has held strong, giving the Federal Reserve flexibility to maintain current policy settings.
– **Interest Rate Outlook**: According to the CME FedWatch tool, expectations of a September rate cut have been shifting, affecting the strength of the U.S. dollar globally.
#### 2. Canadian Economic Data
– **Retail Sales Decline**: Canada’s latest retail sales came in weaker than expected, pressuring the loonie.
– **Core Inflation in Canada**: While headline inflation may be easing, core metrics have remained
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