The USD/CAD pair is marching north to recapture a fresh two-year high around 1.3800 in the Tokyo session. The asset has resumed its upside journey after a minor correction to near 1.3640 and is expected to refresh its two-year high above 1.3800 in the coming sessions. The major concluded its corrective move after the release of upbeat US Consumer Confidence data.

Meanwhile, loonie bulls are underperforming amid broader weakness in oil prices. Soaring odds of a global recession have forced the market participants to a sell-off in the oil counter. It is worth noting that Canada is a leading exporter of oil to the US, and falling oil prices will significantly impact Canada’s fiscal balance sheet.

USD/CAD remains sidelined around the 27-month high marked earlier in the week, steadies near 1.3730 during Wednesday’s Asian session. In doing so, the Loonie pair portrays the trader’s indecision amid a bullish chart pattern and bearish MACD signals.

Also keeping the quote on the buyer’s radar is the one-week-old ascending trend line.

However, the upside momentum needs validation from the pennant’s upper line, at 1.3770 by the press time.

Following that, an upward trajectory towards the yearly top near 1.3810 and then to the lows marked during April 2020, around 1.3850-55, can’t be ruled out.

Meanwhile, pullback remains unattractive beyond the stated pennant’s support line, close to 1.3720 at the latest.

Even if the quote drops below 1.3720, the 1.3700 threshold and an upward sloping support line from September 20, around 1.3660, will be crucial to challenge the USD/CAD bears.

In a case where the pair remains bearish past 1.3660, the odds favoring its slump to the last Thursday’s peak around 1.3545 can’t be ruled out.

Breakout Below the Bullish Pennant has triggered Bearish Momentum

Sep 28 2022