The USD/CAD pair continues to drift lower for the fourth successive day on Thursday and drops to a nearly two-month low heading into the North American session. The pair is currently placed just below the 1.3400 mark, with bearish now awaiting a subsequent breakthrough the very important 200-day Simple Moving Average (SMA) before placing fresh bets.

The US Dollar (USD) selling remains unabated for the third straight day amid expectations that the Federal Reserve (Fed) is nearly done with its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair. 

Furthermore, the March FOMC minutes showed that several policymakers considered pausing interest rate increases after the failure of two regional banks. This, along with a generally positive tone around the equity markets, continues to weigh on the safe-haven Greenback and is seen dragging the USD/CAD pair lower. That said, retreating Crude Oil prices undermines the commodity-linked Loonie and assists spot prices to defend a technically significant 200-day SMA support, at least for now.

In a case where the USD/CAD ignores RSI conditions and drop below 1.3390, the odds of witnessing a bumpy south-run towards February’s low of 1.3262 can’t be ruled out.

On the contrary, the aforementioned 61.8% Fibonacci retracement level around 1.3490, also known as the golden Fibonacci ratio, restricts immediate recovery moves of the USD/CAD pair ahead of the 100-EMA hurdle of 1.3535.

Should the USD/CAD price remains firmer past 1.3535, a convergence of the 200-EMA and 50% Fibonacci retracement, around 1.3565, will be a strong challenge for the pair buyers.

Above all, the USD/CAD bulls should remain cautious unless witnessing a clear upside break of the previous support line from early February, close to 1.3670 by the press time.

USDCAD one last push down before bullish momentum takes over

Apr 13 2023