The USD/CAD pair attracts fresh buyers following an intraday dip to the 1.3485 region and turns positive for the fifth successive day on Monday. The intraday uptick is sponsored by the emergence of aggressive US Dollar (USD) buying and lifts spot prices to over a one-week high, around the 1.3555 region in the last hour.

Against the backdrop of reviving bets for further tightening by the Federal Reserve (Fed), the risk-off impulse boosts demand for the safe-haven USD and assists the USD/CAD pair to build on last week's rebound from the 1.3400 mark, or its lowest level since February 16. In fact, the markets are now pricing in a greater chance of a 25 bps lift-off at the next FOMC meeting in May and the bets were reaffirmed by the mostly upbeat US monthly jobs report (NFP) released on Friday.

In doing so, the Loonie pair bounces off the 50-bar Simple Moving Average (SMA) but stays within a two-week-old bear flag chart formation.

That said, the bullish MACD signals and the firmer RSI (14), not overbought, suggest the USD/CAD pair’s further upside towards challenging the stated bearish chart pattern, by poking the flag’s top line of near 1.3545 by the press time.

However, the quote’s further upside hinges on its ability to stay beyond 1.3545, as well as successful trading beyond the 200-SMA resistance of 1.3635.

In that case, the USD/CAD bulls can aim for the late September highs of around 1.3800 before targeting the previous monthly peak of 1.3861.

Meanwhile, the Loonie pair’s downside break of the 50-SMA, around 1.3500 by the press time, could recall the bears. Though, the sellers must conquer the 1.3485 key support, comprising the lower line of the stated flag, to retake control.

Following that, the latest bottom surrounding 1.3400 may act as an intermediate halt during the theoretical fall targeting 1.3100.

It should be noted that the lows marked in February, close to 1.3260, may act as an extra filter towards the south.

USDCAD expected to provide another leg down

Apr 10 2023