The USDCAD moved higher yesterday, supported by broad-based U.S. dollar strength. In the process, the pair climbed back above its 100-hour moving average, currently at 1.37812. That move marked a shift in short-term momentum, suggesting buyers are regaining some control. Importantly, the price also extended above the 38.2% retracement level of the May decline at 1.38107, which aligned closely with a key swing low from last Wednesday at 1.3814.
In today's trading, the pair initially dipped below the 1.38107 level in the Asian-Pacific session, but quickly rebounded. During the European session, the 38.2% retracement held as support, reinforcing its technical significance of that retracement level. Buyers stepped in, propelling the pair to a new intraday high during the early U.S. session at 1.3844. Although higher, the price fell short of key target resistance.
That next major test for bulls lies at 1.38499, where the 50% midpoint of the May range meets the falling 200-hour moving average. A sustained move above this confluence would further confirm upside momentum and shift the bias more firmly in favor of buyers.
Until then, traders will be watching closely to see if the pair can build on recent strength and stay above the 38.2% retracement at 1.38107. If so, a chance for another move toward the highs and the key target at 1.38499 can be anticipated.
This article was written by Greg Michalowski at www.forexlive.com. Read More Details
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