After hitting a daily low of 1.3617, the USD/CAD climbs toward the 1.3700 figure in the North American session after the US Federal Reserve (Fed) decided to raise rates by 50 bps last Wednesday and sparked recessionary woes. Therefore, the USD/CAD is trading at 1.3684, above its opening price by 0.16%.

From a technical perspective, the overnight strong move-up stalls near ahead of the 1.3700 horizontal barrier. The said handle should now act as a pivotal point, which if cleared decisively should pave the way for an extension of the appreciating move towards the 1.3745-1.3750 area. Bulls might then aim to retest the November monthly swing high and reclaim the 1.3800 mark. The momentum could get extended further towards the 1.3840-1.3850 region, the 1.3900 level and the YTD peak, around the 1.3975-1.3980 region.

On the flip side, weakness below the 1.3600 round figure is likely to find decent support near the 1.3570-1.3565 horizontal zone. Any subsequent fall could be seen as a buying opportunity near the 1.3530-1.3520 confluence. The said area comprises the 100-period SMA on the 4-hour chart and a one-month-old ascending trend line. A convincing break below will negate any positive outlook and shift the near-term bias in favour of bearish traders.

Some follow-through selling below the 1.3500 psychological mark could drag the USD/CAD pair to the 1.3440-1.3430 region en route to the 1.3400 round figure. This is followed by the 100-day SMA, currently around the 1.3365 region, which if broken decisively will mark a bearish breakdown and set the stage for deeper losses.

USDCAD Hawkish Above the H4 TL

Dec 17 2022