USD/CAD Price Outlook: Buyers maintain dominance above 1.3800 as a new breakout emerges

USD/CAD Maintains Upward Momentum

The USD/CAD currency pair has continued its upward trajectory for the fourth consecutive day this week, reaching its highest level in more than two months during Thursday's early European trading hours. Currently, spot prices hover near 1.3820, marking a daily increase of 0.10%, with further gains appearing likely.

Ongoing global geopolitical tensions are reinforcing the US Dollar's (USD) role as the world's primary reserve currency. Additionally, rising energy costs are intensifying inflation worries and strengthening expectations for a more aggressive stance from the US Federal Reserve (Fed), which is lending additional support to the USD and the USD/CAD pair. At the same time, the recent uptick in Crude Oil prices is benefiting the Canadian Dollar, potentially limiting the pair's upward movement.

Technical Analysis Overview

From a technical standpoint, the USD/CAD bulls have been energized by a decisive break above the 50% Fibonacci retracement of the November-January decline, followed by a move past the 200-day Exponential Moving Average (EMA). This development is seen as a significant catalyst for further advances. The momentum remains favorable, with the Moving Average Convergence Divergence (MACD) indicator showing the MACD line above the signal line and a slightly positive histogram.

Furthermore, the Relative Strength Index (RSI) stands at 67, indicating strong upward pressure but still short of overbought territory, which supports a positive short-term outlook for the USD/CAD pair. Key resistance levels are found at the 61.8% Fibonacci retracement (1.3882), followed by the 78.6% level (1.3990), which represent the next targets if buyers maintain control.

Support and Resistance Levels

• Immediate support is located at the 50% retracement (1.3806). A drop below this point could expose the 38.2% level (1.3729), reinforced by previous highs.
• Further downside may see the 23.6% retracement (1.3635), marking a deeper correction and potentially weakening the current bullish outlook.

This technical analysis was generated with assistance from an AI tool.

USD/CAD Daily Chart