- USD/CAD sticks to positive bias for the third straight day amid the divergent Fed-BoC expectations.
- This week’s breakout through the 100-day SMA favors bulls and backs the case for additional gains.
- Any meaningful corrective pullback might now be seen as a buying opportunity and remain limited.
The USD/CAD pair trades with a positive bias for the third consecutive day on Thursday and hovers near the 1.3880 region, or its highest level since May 21, during the Asian session.
The hawkish FOMC Minutes released on Wednesday act as a tailwind for the US Dollar (USD). Furthermore, the Bank of Canada’s (BoC) dovish tilt offsets a modest uptick in Crude Oil prices and continues to weigh on the Canadian Dollar (CAD), which is seen lending additional support to the USD/CAD pair.
From a technical perspective, this week’s breakout through the 100-day Simple Moving Average (SMA) and the 1.3800 round figure favors bullish traders. Moreover, oscillators on the daily chart are holding in positive territory and suggest that the path of least resistance for the USD/CAD pair remains to the upside.
Some follow-through buying beyond the 1.3900 mark will reaffirm the constructive outlook and lift spot prices further towards the 1.3950 intermediate hurdle en route to the 1.4000 psychological mark. This is followed by May swing high, around the 1.4015 region, which, if cleared, would be seen as a fresh trigger for bulls.
On the flip side, the overnight swing low, around the 1.3855-1.3850 region, now seems to protect the immediate downside. Any further pullback might now be seen as a buying opportunity and is more likely to remain limited near the 1.3800 mark. This is followed by the 100-day SMA, around the 1.3790 region.
A convincing break below the latter might prompt some technical selling and make the USD/CAD pair vulnerable to extend the fall towards the 1.3755-1.3750 horizontal zone, the 1.3720 region, and the 1.3700 mark. Failure to defend the said support levels could shift the near-term bias back in favor of bearish traders.
USD/CAD daily chart
