USD/CAD Forecast: Bullish Bias Remains Above 1.3700 as Price Looks to Breakout from Bearish Channel
USD/CAD currency pair remains trading with a bullish bias above the 1.3700 level, underpinned by robust short-term momentum and a bullish technical configuration. Even as it consolidated inside a downtrend channel, the pair has been showing strength for the fourth session in succession, supported by the 14-day RSI remaining above the 50 level and price action still above the nine-day EMA. The short-term attention remains on the important resistance at the 50-day EMA around 1.3748, which if broken, can see a rally to the May high of 1.4016. Yet a breakdown of above short-term support at 1.3688 could leave the pair vulnerable to further losses towards multi-month bottoms. KEY LOOKOUTS • Look for a possible breakout above the 50-day EMA, which could pave the way for additional upside towards the 1.4016 level. • A breakdown below the nine-day EMA might undermine the short-term bullish momentum and cause a pullback towards June’s low of 1.3539. • The 14-day Relative Strength Index remaining above the middle-level 50 point signals sustained bullish inclination in the short term. • Watch price action near the top level of the declining channel at 1.3750 for hints on potential trend reversal or continuation. USD/CAD pair continues its rising trend, trading consistently above the level of 1.3700 in renewed bullish momentum. Although ranged within a falling channel, the pair’s strength is underpinned by the 14-day RSI remaining above 50 and price action above the nine-day EMA indicating short-term bullish potential. Principal resistance is now at the 50-day EMA around 1.3748, which is also the top of the channel. A clear break above this level may speed gains to the May high of 1.4016, with a failure to hold above 1.3688 likely to tempt bearish pressure. USD/CAD remains firm above 1.3700, with a bullish RSI and short-term moving averages giving it a supportive base. A breakout above 1.3748 may set the stage for more gains, with support at 1.3688 still pivotal. The pair remains within a falling channel, prompting traders to remain on guard. • USD/CAD is trading above 1.3700, its fourth day of consecutive gains. • The pair is still in a downtrending channel, which suggests continued consolidation. • The 14-day RSI is north of the 50 level, which is bullish in the short term. • The first resistance is at the 50-day EMA at 1.3748, which coincides with the top of the channel. • A break through 1.3748 may take the pair to the May high of 1.4016. • Key support is at the nine-day EMA of 1.3688; a break could prompt a decline to 1.3539. • Additional declines could reach multi-month lows at 1.3419 and the channel base at 1.3340. The USD/CAD currency pair has provided steadfast strength over recent trading sessions, an indication of restored investor faith in the US Dollar as global market dynamics shift. Economic announcements, interest rate forecasts, and geopolitical news have all played a part in the pair’s direction. Market participants are keeping a close eye on the overall macroeconomic context, particularly with regard to oil prices and North American trade flows, which in the past have influenced the Canadian Dollar’s performance. USD/CAD DAILY PRICE CHART SOURCE: TradingView Besides, market sentiment is also sensitive to major Federal Reserve and Bank of Canada announcements. The divergences in monetary policy directions between the two central banks usually create volatility for the USD/CAD currency pair. Since both economies are working their way through inflationary pressures and growth expectations, the pair tends to be quite active owing to fundamental changes and investor positioning. TECHNICAL ANALYSIS USD/CAD is now moving within a falling channel, indicating a larger consolidation period. Yet, the pair has a bullish bias in the short term, as it is above the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) is above the 50 mark. The nearest resistance comes at the 50-day EMA of 1.3748, which happens to be the upper line of the channel. A successful breakout above this zone could signal a shift in medium-term momentum, while failure to do so may keep the pair confined within its current range. FORECAST If USD/CAD can break through the pivotal resistance at the 50-day EMA around 1.3748 and the top of the falling channel, a more powerful bull trend could be triggered. Such a breach would enhance medium-term sentiment and potentially set the stage for a run toward the May high of 1.4016. Persistent buying interest above that level could also propel the pair into higher resistance levels, underpinned by positive momentum indicators. Conversely, a failure to stay above the near-term support at the nine-day EMA of 1.3688 may trigger fresh selling pressure. A fall below this level might expose the pair to further downward moves towards the June low of 1.3539. Fresh bearish pressure might send USD/CAD even lower towards 1.3419, which is the lowest print since February, with subsequent possible testing of the down channel’s lower border around 1.3340.