The USD/CAD pair has recently consolidated around the 1.3960 level, after a period of upward momentum. While the Canadian Dollar (CAD) has received some support from higher crude oil prices and a potential slowdown in Bank of Canada rate cuts, the US Dollar (USD) remains strong due to a hawkish Federal Reserve and positive US economic data. The recent release of stronger-than-expected US inflation data has reduced expectations for aggressive interest rate cuts by the Federal Reserve. This has strengthened the US Dollar and put downward pressure on the Canadian Dollar. From a technical perspective, the USD/CAD pair has broken above the key 1.4040 resistance level, indicating a potential bullish trend. However, the RSI and Stochastic indicators suggest that the pair may be overbought, which could lead to a short-term consolidation or correction.
On the upside, the 1.4100 level and the 1.4170 level are key resistance levels. A break above these levels could lead to further gains. On the downside, the 1.3960 level is acting as immediate support. A break below this level could weaken the bullish momentum and push the pair towards the 1.3815 level. In conclusion, the USD/CAD pair is currently in a bullish trend, supported by a stronger US Dollar and weaker Canadian Dollar. However, the pair may experience a short-term consolidation or correction due to overbought conditions. Traders should closely monitor economic data releases, central bank policies, and geopolitical events for potential shifts in the pair's direction. Conversely, support can appear right away at the 1.4000 round level if the price drops below 1.4040. The next line of defense might be the 2022 high of 1.3976 and the previous resistance of 1.3945. A break below the 20-day exponential moving average (EMA) and the 1.3900 figure might send out more aggressive negative signals, indicating a deeper decline to the 1.3820-1.3840 support area.
