**USD/CAD Price Forecast: Loonie Gains as Pair Holds Below 1.4000, Testing Lower Support of Ascending Channel**
*By Anil Panchal | Adapted and Expanded by [Your Name]*
The USD/CAD currency pair continues to trade below the key psychological level of 1.4000 despite broad U.S. dollar strength, as technical and fundamental pressures weigh on the pair. Market participants are closely monitoring the ongoing developments in both economies, with recent data and broader risk sentiment playing pivotal roles in shaping price direction.
In recent trading sessions, the pair has reversed from multi-month highs, retreating from a peak near 1.3846 reached earlier in October. Despite some attempts at a rebound, the bulls have struggled to regain momentum due to a combination of oil market strength, improved Canadian economic data, and softening U.S. Treasury yields.
This article delves deeper into the current USD/CAD outlook, examining technical levels, key macroeconomic indicators, and broader market sentiment as we wrap up October and head into November.
## Overview of Current USD/CAD Steering Factors
Several factors have been influencing the USD/CAD trading behavior. Understanding these reasons provides traders and investors with better clarity:
– **Oil Prices and Canadian Dollar Correlation**: The Canadian dollar, often referred to as the loonie, maintains a strong positive correlation with crude oil prices since Canada is a major oil exporter. As WTI (West Texas Intermediate) oil hovers above $85 per barrel, the loonie gains support, weighing negatively on USD/CAD.
– **Dwindling U.S. Dollar Momentum**: After hitting a 10-month peak in early October, the U.S. dollar has eased due to speculation that the Fed may be nearing the end of its tightening cycle. Consequently, diminishing U.S. Treasury yields are further reducing the greenback’s allure.
– **Canadian Economic Resilience**: Recent economic indicators from Canada have held up reasonably well, keeping pressure on the USD/CAD bullish case. The Bank of Canada (BoC) maintains a relatively cautious stance, but market expectations of continued policy discipline help anchor the loonie.
– **Geopolitical Risk Premium**: Elevated geopolitical risks in the Middle East have buoyed demand for safe-haven assets like the U.S. dollar and gold. While the USD occasionally benefits from these tensions, a strong oil market can balance this effect by boosting oil-linked currencies like the CAD.
## Technical Analysis of USD/CAD
As of the latest trading sessions, the USD/CAD pair is consolidating just above key technical support while remaining trapped within a broad ascending channel that has guided price action since early September.
### Key Technical Highlights:
– The pair recently bounced off the lower boundary of an ascending trend channel that has been in play since September.
– Immediate resistance aligns near 1.3780, followed by the October high at 1.3846.
– Strong psychological resistance remains intact near the 1.4000 level, which hasn’t been breached convincingly since 2022.
– Support is seen near 1.3655, a key level that marks the lower bound of the trend channel.
– Below 1.3655, sellers may target the 50-day simple moving average (SMA) around 1.3600, then 1.3550.
### Indicators to Monitor
– **RSI (Relative Strength Index)**: Currently hoovering near the mid-levels, indicating neither overbought nor oversold conditions.
– **MACD (Moving Average Convergence Divergence)**: Mixed momentum signals, though slightly tilting in favor of a bearish continuation.
– **Bollinger Bands**: The pair has pulled back toward the median line, which supports the near-term consolidation outlook.
The presence of a rising channel suggests the broader trend still leans bullish, but the waning buying interest at higher levels calls for caution. A breakdown below 1.
Read more on USD/CAD trading.