USD/CAD is consolidating near a major area of interest!
Will buying pressure at the level lead to the pair extending its long-term uptrend?
Let’s take a closer look at the daily time frame:
USD/CAD 4-hour Forex Chart by TradingView
The U.S. dollar is crawling back from its monthly lows as the Trump administration shows more willingness to de-escalate trade tensions with China, and Trump backs off from threatening Fed Chairman Powell’s job.
Meanwhile, demand for the oil-linked Canadian dollar could stay limited, with traders digesting talk of a possible Russia-Ukraine peace deal and OPEC+ members pushing to ramp up output by June.
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the U.S. and Canadian dollars, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
USD/CAD, which had turned lower from 1.4800 back in February, is now trading about 1,000 pips down and sitting closer to the 1.3800 psychological level.
If you zoom out, you will see that 1.3800 had been a major resistance zone between late 2022 and early 2024. This time around, a dip to 1.3800 would also bring USD/CAD closer to a trend line support that has been in play since the start of 2024.
Keep an eye out for a bullish breakout from the current consolidation zone, which could push USD/CAD toward the 1.4000 psychological handle near the daily chart’s 200 SMA.
If buyers can hold USD/CAD above 1.4000, the pair could pick up more momentum and aim for the 1.4200 handle or even the previous resistance around 1.4600.
On the flip side, a bearish break from the consolidation could drag USD/CAD toward trend line support. Watch for red candlesticks and steady trading below 1.3700, which could open the door for a drop to the 1.3450 area of interest.
As always, watch out for other top-tier catalysts that could impact overall market sentiment, and make sure you practice proper position sizing when taking any trades!