**USD/CAD Bounces Off Session Lows: Trades Near 1.3847 Amid Mixed Economic Indicators**
*By Rex Norman, originally published on FXDailyReport.com*
The US dollar (USD) displayed renewed strength on Monday, rebounding from session lows against the Canadian dollar (CAD) as the pair climbed to trade near the 1.3847 level. This movement underscores sustained bullish momentum in the USD/CAD currency pair, although underlying factors from both the US and Canadian economies continue to present mixed signals. Traders remain cautious ahead of important economic releases expected from both countries in the coming days.
Below, we take an in-depth look at the factors influencing the USD/CAD exchange rate, the technical outlook, and economic indicators that could drive future movements.
## Recent USD/CAD Price Action
After opening with soft downside pressure at the beginning of the trading session, the USD/CAD pair showed resilience by bouncing off session lows. The currency pair is trading firmly in the upper zones around 1.3847, reflecting strong demand for the US dollar amid cautious market sentiment.
– At the start of the trading day, USD/CAD dipped to a session low around the 1.3800 mark.
– Buyers then stepped in, pushing the pair upward to reclaim ground towards 1.3847.
– The 50-day Simple Moving Average (SMA) has been acting as a support level in recent sessions.
– The pair has remained in a well-defined uptrend channel visible on the daily chart.
– A sustained break above 1.3850 could open the door toward testing the 1.3900 psychological resistance.
## Technical Analysis
Analysts observing the daily chart suggest USD/CAD remains in a strong uptrend, supported by positive momentum indicators and a recent pattern of higher highs and higher lows. Key levels to watch include:
**Resistance Levels:**
– 1.3850: Immediate resistance and current area of consolidation
– 1.3900: Psychological barrier and a recent multi-week high
– 1.3975 – 1.4000: Long-term resistance from March 2023 highs
**Support Levels:**
– 1.3780: Near-term dynamic support aligned with the 50-day moving average
– 1.3700: Static support level, offering a base for rebound patterns
– 1.3625: Fib retracement zone from recent impulse wave
**Technical Indicators:**
– Relative Strength Index (RSI): Hovering near 60, suggesting upside bias but not overbought
– MACD: Remains above the signal line, supporting bullish momentum
– Bollinger Bands: Price trading near the upper band, indicating short-term buying interest
The bullish structure remains intact unless the pair decisively breaks below 1.3700, which could signal an early trend reversal.
## Economic Drivers Behind USD/CAD
The movement in the USD/CAD exchange rate is significantly influenced by macroeconomic indicators from both the United States and Canada. Market participants track these metrics closely to anticipate central bank policy and the broader direction of capital flows.
### United States Economic Overview
Recent US economic data has kept the US dollar supported as expectations remain divided regarding the timing of the Federal Reserve’s first interest rate cut.
Key factors supporting USD strength include:
– **Inflation:** The US Consumer Price Index (CPI) rose 3.4% year-over-year in April 2024, slightly hotter than market expectations. Core inflation is proving persistent, leading to speculation that the Fed will hold rates higher for longer.
– **Labor Market:** Nonfarm payroll data continues to reflect a strong labor market. Although job gains have moderated compared to earlier in the year, the unemployment rate remains historically low near 3.9%.
– **GDP Growth:** The US economy expanded at an annualized rate of 1.6% in Q1 2024 — slower than expected, but still positive amid global
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