USDCAD gives up weekly gains; might be due to a pullback
Potential support could next emerge near 1.3400
US core PCE inflation index on the agenda
USDCAD erased Tuesday’s bounce as the 20-day simple moving average (SMA) obstructed progress, forcing the price to ease towards its 50- and 200-day SMAs at 1.3450. This is also where the 38.2% Fibonacci mark of the previous upleg is placed.
Market sentiment is neutral-to-bearish according to the technical indicators. The MACD is marginally below its zero and signal lines, while the RSI has resumed its negative slope below 50, but is still above its previous lows. Likewise, the stochastic oscillator has also rotated southwards.
If sellers persist, the nearest pivot point could develop around the 50% Fibonacci of 1.3392 and the important almost flat constraining line drawn from November 2022. Additional declines from there could encounter the upper band of the broken bearish channel as well as the 61.8% Fibonacci mark of 1.3320. A clear close lower could confirm another correction towards the 2021 ascending trendline currently intersecting the 78.6% Fibonacci of 1.3220.
On the upside, the focus will be on the 20-day SMA and the 23.6% Fibonacci level of 1.3550. A successful penetration higher could initially stabilize near the 1.3600 psychological number before accelerating towards September’s high of 1.3693 and the long-term descending trendline from the 2020 top at 1.3700.
In summary, USDCAD is displaying signs of softening, bringing the 1.3400 area next to the limelight.
USD/CAD Vulnerable to More Downside
