The USD/CAD pair attracts some buyers near the 1.3300 mark and stages a goodish intraday bounce from over a two-month low touched earlier this Monday. The pair sticks to the recovery gains through the first half of the European session and is currently placed near the top end of the daily range, just below mid-1.3300s.

The upside for the USD/CAD pair, meanwhile, seems capped amid the underlying bearish sentiment around the US Dollar. The prospects for a less aggressive policy tightening by the Fed keep the USD bulls on the defensive near a nine-month low touched last week. Traders, however, seem reluctant and prefer to move to the sidelines ahead of the highly-anticipated FOMC monetary policy decision, scheduled to be announced at the end of a two-day meeting on Wednesday.

Even so, the Loonie pair remains inside a bearish triangle formation established since Wednesday. Adding strength to the bearish bias is the downbeat RSI (14) line.

As a result, the quote’s corrective bounce is less likely to overcome the immediate hurdle, namely the resistance line of the stated triangle near 1.3325.

Even if the USD/CAD buyers manage to cross the 1.3325 hurdle, the previous support line from January 13 and the 200-Hour Moving Average (HMA), respectively near 1.3360 and 1.3395, could challenge the upside momentum.

It’s worth observing that a one-week-old downward-sloping resistance line near 1.3430 acts as the last defense of the USD/CAD bears, a break of which could propel the quote towards the January 19 swing high near 1.3520.

Alternatively, a downside break of the stated triangle, close to 1.3290 by the press time, could direct USD/CAD sellers towards the November 2022 low surrounding 1.3225 ahead of challenging the 1.3200 round figure.

Overall, the USD/CAD bears are likely to keep the reins unless the price stays successfully beyond 1.3520.

Selling USDCAD after a temporary recovery

Jan 30 2023