• USD/CAD may find initial support at the nine-day EMA of 1.4062.
• The 14-day Relative Strength Index is at 56, indicating positive but not overstretched momentum.
• The immediate resistance lies around the upper boundary of the descending channel at 1.4140.

USD/CAD extends its losses for the second successive day, trading around 1.4110 during European hours on Tuesday. The technical analysis of the daily chart shows that the pair price is remaining within the descending channel pattern, signalling an ongoing bearish bias.

The USD/CAD pair holds a mildly bullish near-term bias as price remains above both the nine- and 50-period Exponential Moving Averages (EMAs), suggesting underlying demand persists after the latest pullback from recent highs. The 14-day Relative Strength Index (RSI) around 56 hints at positive but not overstretched momentum, while the FXS Fed Sentiment Index staying elevated reinforces a constructive backdrop for the US dollar against the Canadian dollar.

On the downside, the USD/CAD pair may fall toward initial support at the nine-day EMA of 1.4062, followed by the 50-day EMA of 1.4056. A break below the moving averages would put downward pressure on the pair to navigate the region around the lower boundary of the descending channel around 1.3850, followed by the five-month low of 1.3732, recorded on May 21.

The USD/CAD pair may test the immediate barrier at the upper boundary of the descending channel around 1.4140. A break above the channel would support the pair to explore the area around a nearly 18-month high of 1.4299, recorded on October 14.

Fed rhetoric turns more hawkish as officials stress persistent core inflation

Rabobank’s RaboResearch team highlights that “a few Fed speakers crawled out of the woodwork yesterday to opine on the inflationary environment in the US,” including alternate voter Thomas Barkin of the Richmond Fed and non-voter Austan Goolsbee from Chicago. According to the bank, the rhetoric from both officials “broadly aligned with the now more hawkish lilt across the FOMC,” as they pointed to the “persistence of core CPI inflation, especially in services,” and underscored the “justification for future hikes.”