USDCAD struggles for clear directions as the 100-DMA challenges the bears at the lowest levels in two months during early Monday. In doing so, the Loonie pair justifies the market’s anxiety, as well as the mildly bid prices of Canada’s main export item WTI crude oil.

The price is making a move for it on the backside of the micro trendline. This is a bullish development for the days ahead. A break above 1.3390 opens the risk of a move to the major trendline opens the risk of a break above 1.3575 and much further. Looking at the M-formation on the weekly chart, for instance, we have the potential for a significant correction.

In fact, the USD Index, which measures the greenback's performance against a basket of currencies, hits a two-and-half-month low amid expectations for a less aggressive policy tightening by the Fed. 

Although the USDCAD pair’s sustained trading below the 50-DMA, around 1.3530 at the latest, keeps sellers hopeful, the 100-DMA level surrounding 1.3230 restricts the quote’s immediate downside.

As a result, the USDCAD bears are all set to revisit the 100-DMA support surrounding 1.3230. However, the 61.8% Fibonacci retracement of the pair’s August-October upside, near 1.3200, could challenge the pair’s further downside.

Meanwhile, the aforementioned support-turned-resistance line restricts the USDCAD pair’s immediate recovery near 1.3370, a break of which could direct the buyers toward the 50-DMA level of 1.3525.

In a case where the USDCAD remains firmer past 1.3525, the odds of witnessing a run-up towards the monthly high near 1.3810 can’t be ruled out.

Overall, USDCAD is well-set for further downside despite the latest adversities.

USDCAD Driving towards deeper retracement zones

Nov 14 2022