USD/CAD Under Heavy Selling Pressure

On Thursday, the USD/CAD currency pair experienced heavy selling pressure and showed no signs of improvement until the end of the North American session. Currently, the pair is trading at 1.3530, which represents a decline of 0.20% from Wednesday’s close.

Despite this decline, the pair still holds its head above the 1000-day Simple Moving Average (SMA). One of the primary reasons for the decline in the USD/CAD pair is the recovery in crude oil prices.

As Canada is a major oil exporter, the recovery in oil prices is seen as a positive development for the Canadian economy and, thus, strengthens the Canadian dollar. As a result, the USD/CAD pair experiences downward pressure.

In addition, the global risk sentiment has been improving, acting as a tailwind for the USD as a safe-haven asset. As a result, when investors are uncertain about the global economic outlook, they tend to flock towards safe-haven currencies such as the USD, which can further increase downward pressure on the USD/CAD pair.

Despite these factors, the pair trades above its 1000-day SMA, a positive sign for the USD/CAD bulls. If the pair continues to hold above this level, it could signal a potential reversal in the short-term trend.

Technical Analysis: USD/CAD Breaks Through Trend-Channel and SMA

The USD/CAD pair has recently broken through a downward trend channel, signaling a positive outlook for traders looking to buy the pair. Furthermore, this breakthrough indicates that the pair has successfully surpassed a resistance level previously, pushing it lower, suggesting that it may move higher.

Moreover, the pair has risen above the 100-day Simple Moving Average (SMA), a widely used technical indicator. This development further supports the idea that the pair could continue to appreciate. Investors may view any decline below the psychological price mark of 1.3500 as a buying opportunity.

However, the downside is expected to remain limited around the 50-day SMA hovering at the 1.3460 regions. The next support is located at 1.3440, and if the pair breaches this level, it may lead to a downward trend toward the psychological level of 1.3400.

Despite the recent positive breakout of the USD/CAD pair, any follow-through selling may soon lead to a significant sell-off. This aggressive technical selling could destroy the positive outlook and prompt investors to exit their long positions.

If this happens, the pair may accelerate its decline and test the next relevant support level near the 1.3325 regions. It could also push even further down to the psychological mark of 1.3300 and hit yesterday’s low at 1.3270.

Therefore, traders should closely monitor signs of follow-through selling to adjust their trading strategies accordingly. The USD/CAD pair faces resistance at the 1.3570 level, a barrier to further increases. Additionally, investors see the 1.3600 level as a potential obstacle to further gains.

However, if the USD/CAD exchange rate continues to rise and breaks through these levels, the bulls could push for the exchange rate to reach a high point previously reached in January, around the 1.3685 level.

This level could serve as a major resistance point, and if the bulls successfully break through it, the pair may have significant upward momentum in the near term. As always, traders should closely monitor price movements around these key resistance levels to make informed trading decisions.