USD/CAD is marching towards the round-level resistance of 1.3400 in the early European session. The Loonie asset has attracted significant bids after defending its crucial support of 1.3374. A decent recovery in the US Dollar Index (DXY) and a correction in the oil price have provided support to the Loonie asset.

USD/CAD has shown a decent recovery after testing the demand zone placed in a narrow range of 1.3303-1.3315 on a four-hour scale. The Loonie asset is retracing toward the 20-period Exponential Moving Average (EMA), which is around 1.3410.

The Relative Strength Index (RSI) (14) is attempting a break into the 40.00-60.00 range from the bearish range of 20.00-40.00, which will trim downside bias for the Loonie asset.

Apart from the risk catalysts, the quote’s failure to cross a horizontal resistance area comprising multiple levels marked since early April, around 1.3405-10, also weigh on the USD/CAD prices.

Furthermore, RSI (14) rebound from the oversold territory and sluggish MACD signals also prod the USD/CAD buyers

With this, the Loonie pair appears all set to challenge a one-month-old horizontal support zone surrounding 1.3315-3300.

Following that, lows marked in February and late 2022, near 1.3260 and 1.3225 in that order, will be in the spotlight.

Alternatively, the USD/CAD pair’s recovery moves past the 1.3410 immediate hurdle isn’t an open welcome to the Loonie pair buyers as the 200-EMA and five-week-old horizontal area, near 1.3510 and 1.3530 respectively, can check the upside moves.

It’s worth noting that a downward-sloping resistance line from March 10, close to 1.3620 by the press time, appears the last defense of the USD/CAD bears.

Loonie can find an escape for retesting DEMA200

May 10 2023

Stop Loss -0.30%

Holding time 1hr

1.33923

Entry price

1.33526

Stop loss price